Getting credit is difficult for many people, especially low-income earners, because there isn’t enough financial history to show how reliable they are with repayments. The good news is that smartphone financing can help create that evidence. With every recorded payment, a customer begins building a track record that can help inform future credit decisions.
But first, let’s understand what credit history is.
Credit history and why it matters
A credit history is a record of how someone has handled borrowing and repayment over time. It typically shows credit previously taken; whether repayments were made on time; missed or late payments; outstanding obligations; and whether previous credit was successfully repaid.
Lenders use this information to assess an individual’s creditworthiness. For someone who has borrowed and repaid several times, there may already be plenty of information to assess. But someone who has never used a bank loan, credit card or other formal credit product may have very little history at all.
That does not automatically mean the person cannot repay a loan. It means there is less evidence available to show whether they can.
How credit scoring works
While a credit history is the underlying record, a credit score predicts how likely you are to repay borrowed money on time. It is one way of turning information from a credit history record into an assessment of credit risk.
Traditional credit-scoring systems may consider factors such as:
- Repayment behaviour
- Existing loans/obligations
- Length of credit history
- Missed payments or defaults
- How much credit you already use
A lender can then use that assessment alongside your income, affordability and other information when making a decision.
The challenge is that this system only works when you already have a meaningful financial record. If you don’t, a lender may decide to not grant your request. However, some lenders are increasingly looking at another approach.
Alternative credit scoring
Alternative credit scoring uses non-traditional data (instead of relying solely on standard credit records) to help assess creditworthiness. Depending on the provider and market, this can include things such as mobile-money transactions, digital payment behaviour and/or account activity, utility and telecom bills, rental history, etc. The goal is to create additional evidence where traditional financial information is limited.
One common example of alternative credit scoring is mobile-based credit scoring.
The evidence for mobile-based credit scoring
Research suggests that mobile-generated information can contain meaningful signals about repayment behaviour.
In the 2019 World Bank Economic Review research by Daniel Björkegren and Darrell Grissen, the researchers matched mobile-phone behaviour with actual loan repayment outcomes. Their findings showed that mobile data could help distinguish between higher- and lower-risk borrowers, including people with little conventional financial history. Among people classified by the model, those in the highest-risk group were 2.8 times more likely to default than those in the lowest-risk group.
A more recent study on unlocking credit access using mobile data examined mobile information from more than 1,500 individuals and found that combining different types of mobile data improved credit-risk classification. The researchers reported accuracy of up to 89% within their dataset.
Beyond research, mobile-based credit scoring is being used by companies today. In Kenya, for example, M-Shwari became an early large-scale example of using information from the mobile ecosystem to help make lending decisions. This publication by CGAP documented how customer information generated through Safaricom and M-PESA relationships could help assess borrowers who did not have extensive conventional banking histories.
But alternative credit scoring still depends on having enough digital data to analyse. For people who don’t even have access to mobile phones nor any digital footprint, how do we assess their credit history?
Building a credit history through smartphone payments
This happens when a smartphone itself is financed: the repayment process begins creating the financial evidence (credit history) needed to access digital credit. When a customer receives a smartphone and agrees to pay for it over time, a credit relationship begins. Each successful payment adds to a growing record of behaviour, giving the lender more information about how the customer manages credit over time.
The table below captures the stages of building credit history through smartphone payments
The important part is the pattern of payment, which can begin to show how a customer manages an obligation over time. The provider can then use the history to make better-informed decisions about that customer.
How financing a smartphone with M-KOPA can build your credit history
When you get a smartphone through our flexible payment plan, each payment you make contributes to a repayment history with us. The longer you successfully make your payments, the more information we have about how you handle a financial commitment.
Here’s a simple progression for our customers:
- Get an M-KOPA smartphone
- Make payments consistently
- Build a repayment history with us
- Access more digital credit
- Become eligible for other products
So financing your smartphone with us offers value beyond just spreading the cost of the device, you also unlock other benefits like our hospital cover and e-mobility packages. And beyond unlocking other benefits, this is an important first step for someone who has no credit history because you are not only paying towards owning a smartphone but also building a record of how you manage credit.
From consumer transaction to financial empowerment
A normal consumer transaction ends when the product has been paid for, but smartphone financing gives you a financial record that unlocks more digital credit for you. For many of our customers, getting connected creates an immediate economic tool, while the repayment relationship can create a pathway into financial services that may previously have been difficult to access.
Our 2026 Nigeria Impact Report found that 77% of customers use their smartphones or digital loans to generate income, while 75% say they earn more since accessing M-KOPA. Among long-term customers, 81% reported an improvement in their ability to meet household expenses. We have also enabled 290,000 Nigerians to access a smartphone for the first time, while 52% of women customers surveyed said M-KOPA gave them access to their first formal loan.
As customers make regular payments, they build a repayment history with us. Eligible customers can subsequently gain access to additional services such as digital loans, giving them another potential source of capital for their businesses, households or other needs. Across our markets, customers such as Kenyan trader Lydia Nderitu have described using the combination of a financed smartphone and subsequent digital credit to move from very small-scale trading into larger businesses.
That is what turns the smartphone from a simple purchase into a financial empowerment tool.
Your smartphone can be a starting point
In conclusion, the bigger opportunity is not simply to make smartphones more affordable, but to make the journey of paying for one count for more. When every successful payment strengthens your financial track record, access to a smartphone can unlock more benefits for you.
With M-KOPA, your smartphone can be both a business tool for today and a step towards greater financial opportunity tomorrow.
Explore M-KOPA smartphones today.
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