How To Improve Your Credit Score In Nigeria

credit score

When 300 is a terrible a thing.

Picture this: you want to get insurance on your car for the very first time and you’re suddenly labelled ‘high risk’ and slammed with a crazy premium. You’re still trying to work out why when your friend who you recently opened a bank account with calls to ask if you also got the offer for a credit card. You say you’ll check but you already know no such offer was sent to you. You’re beginning to feel like it’s just not your day when you receive an e-mail from your HR saying your salary advance application has been denied.

Contrary to what you think, no one is after you – not from your village or anywhere else. It’s more likely that your credit history has been investigated and the situation is not looking great. Or maybe none of that happened and it’s all just a nightmare warning you of times to come. Bottomline: your credit rating – and subsequent credit score – is going to become crucial very soon especially now that your BVN ties you to all your money moves everywhere.

For our readers who are not familiar with credit rating, here’s a simple explanation: A credit rating looks at your ability to fulfil financial commitments based on your past financial habits. Essentially, someone will pass a fine-toothed comb through your spending, borrowing and repayment habits to see how responsible you have been, and are likely to be. Once this assessment is done, a score between 300 and 850 – where 300 is terrible, and 850 is awesome – is awarded for those it may concern to see at any given time.

Whether you’re just starting out building a credit history or you already have one you may or may not be proud of, here are a few tips to ensure you rank as close to 850 as possible:

  1. Make all payments and repayments on time:

    For most credit platforms, repayments are programmed as direct debits on your bank account. However, there must be money in said account for a debit to occur. Do your best to ensure that the value to be debited is available in the account when due. Occasional late payments – perhaps due to unforeseen contingencies – can be forgiven but frequent defaults can lead to penalties and will certainly weaken your credit score.

  2. Reduce your debt level:

    It is advisable for not only your credit rating but also your sanity to reduce the number of debts you’re servicing. When you have multiple loans – or credit cards – from multiple facilities it brings to question your ability to meet your needs with your available income.

  3. Don’t use new loans to pay off old ones:

    This might seem like a great idea, but it keeps you in a cycle of debt that will become increasingly difficult to break. Clear off old debts before acquiring news ones. This will demonstrate that you can properly manage your finances and you have the resources to service your debts. One exception to this is if you are refinancing your debt with another with considerably lower interest rate.

  4. Check your credit score and challenge any errors:

    You’ve probably already thought about this: where does this credit rating – or score – exist? You can check with any of these 3 licensed agencies: CRC Credit Bureau Ltd; CR Services Credit Bureau Plc; and First Central Credit Bureau. Once your score is determined, review the information to ensure you are properly represented. You can also take the FREE Risk Assessment Test FINT offers by registering as a borrower. Click HERE to take the RAT

  5. Don’t make too many requests for loans at the same time:

    We understand that you need to have a plan a, b… z when you’re looking to finance a project. However, we must advise against applying for multiple loans at a time because this will trigger multiple inquiries into your credit history. While the effect will likely be short-lived, this might create the wrong perception of your financial health and negatively impact your credit score.

You may not be acquiring any loans from the banks at the moment, or maybe you’re working with other reputable agencies like FINT – who carry out their own credit-worthiness assessment – but your credit score is an important element in determining the health of your finances; do well to have a good one.

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