Why do lenders need BVN: is it necessary to get a loan?

Have you always wondered why lenders ask for your BVN and what they do with it?

This article explains in detail why lenders need your BVN and how necessary it is to get a loan.

You’ll agree that any individual who owns a functioning bank account must be familiar with the acronym BVN, but let us further understand what it is.

BVN (Bank Verification Number) is a unique 11-digit number issued by the CBN (Central Bank of Nigeria) to individuals. It’s the same across all bank institutions for the same individual. This means that no matter how many accounts you open with different banks, your BVN remains unchanged.

The answer to this question varies with each source you find. Some might say “yes”, others might say “no”, and there may even be a few “it depends” but the most correct and logical answer would be “yes”.

Not all lenders indeed ask for BVN, as they all have different criteria but you should be worried if your lender doesn’t ask for your BVN. (Very worried).

Your BVN does more than allow you access to a bank account, it also serves as an identifier within the financial space. (Like a financial ID card).

Lenders use it to check your credit history and Karma (a privately sourced blacklist, so if one has a history of default with another lender, this is where there will be “a caught”.)

A lender who doesn’t ask for a BVN is skipping a lot of the credit check procedures, that’s why you should be careful. It’s almost like the lender isn’t afraid to lose their money, smells like trouble.

A means to verify identity: BVN serves as a universal ID in all banks in Nigeria (think of it like your NIN but for the financial industry), as such the information connected to your BVN remains unchanged across all banking institutions. This means it serves as the surest way that a lender can verify your identity.

To prevent identity theft: No two individuals have the same BVN, and as it serves as a means of identification, the chances of individuals using another person’s identity to get a loan drastically subside because of the checks involved.

To prevent fraud: The use of BVN as a check can also prevent fraud both on the side of the borrower (connected to identity theft) and lender (they might be loan sharks in disguise).

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At Irorun, we understand you might have doubts about giving out your BVN and that’s why we advise that you carry out the proper checks on your prospective lender to ensure they’re legitimate and not a scam. Here’s how to carry out these checks on lenders. Be rest assured as well that Irorun doesn’t illegally store your sensitive financial data or share with third parties.

If you have any more questions please send us a message at support@irorun.com!