This Nigerian fintech firm provides solution to bad debt for private and digital lenders in Nigeria

CreditChek, a firm in Nigeria that performs credit assessments, reported raising $240,000 in a pre-seed investment round. The company said that with the help of this money, it will be able to realize its goal of building the most trustworthy credit infrastructure in Africa within the next five years.

Aidi Ventures, Ham Serunjogi of Chippercash, Olumide Ogunsanwo of Adamantium Fund, Damola Adegboyega of Assembly Investors, Isaac Ewaleifoh of Launch Africa Ventures, and Ogundiran Kayode all contributed to the fundraising, which was led by Atom Capital.

CreditCheck co-founder Kingsley Ibe stated that the business tested its MVP with a few companies and made iterations before launching it in beta in April 2022. It signed up 30 firms while it was in beta, handled thousands of API requests, and eventually exited beta in June 2021.

“After we launched the first version in December 2021 and onboarded a few hundred users in the first two weeks; we quickly realized, as with most consumer-focused startups, it requires a high cost of acquisition and would require a lot more to retain the users,” Ibe said.

The team has persisted in sticking to the company's vision of promoting financial inclusion while remaining adaptable to its goals. In the next five years, they want to be the most trustworthy credit infrastructure in Africa, creating confidence between lenders and borrowers, he continued. CreditCheck is happy to report that it has secured $240,000 in pre-seed funding from Atom in support of that goal.

CreditChek develops powerful identity, credit, and verification services using structured, user-permitted data from a variety of sources. These services enable fintechs, banks, microfinance organizations, retail businesses, and mobile money operators to create better financial products for the underserved, according to Nairametrics.

Ibe used statistics from the National Bureau of Statistics to demonstrate the importance of CreditCheck in the economy. The data showed that financial institutions lost more than $4 billion in 2018 due to persistent loan defaulters. People in Nigeria who borrow money from three to five lenders at once and then vanish into thin air are a common occurrence. Lenders continue to be overburdened by these types of bold tactics and an overall unwillingness of borrowers to repay debts.

This is mostly due to the fact that current "credit bureaus have a high barrier" to entry, making them unavailable to the typical Nigerian entrepreneur. Based on historic statistics on underbanked consumers, result show that the majority of low-income consumers are not included in the official banking system.

Ibe said that the company changed its focus to creating the infrastructure for credit evaluation for lending companies in Africa, a system that will let traditional and digital business owners accurately determine the "creditworthiness of potential customers."

Businesses in the rising market in Africa and all over the world have been battling a common foe: bad debt.

The difficulty of debt recovery for many of these organizations is identification verification and credit evaluation of their clients. According to 2018 data from the Bureau of Statistics, debt recovery is a problem that has cost the global loan service business a staggering $4 billion. According to Kenya's TransUnion credit reference agency, an estimated 3.2 million people—or 6% of the country's population—have been banned for failing to repay digital credit loans.