💳Do You Know Your Credit Score?

Discover why your credit score matters and how to check it in Nigeria. Don’t miss out on loans and other financial opportunities due to ignorance.

Hey there, SimplVest community!

You know that feeling when you find out something important and wish you’d known it sooner? That’s how many Nigerians feel about their credit scores. Surprisingly, many people don’t even know they have one, let alone what it means for their financial health.

In this edition, we’re exploring the world of credit scores in Nigeria. We’ll answer questions like “What is a credit score?” and “How can I check mine?” Stick around because knowing your credit score could be the key to unlocking better financial opportunities.

What to Expect:

• What is a credit score, and why it matters
• How credit bureaus work in Nigeria
• Steps to Check Your Credit Score
• Understanding what your credit score means
• Tips for maintaining a good credit score

What is a Credit Score?

Consider your credit score as the result or grade for your financial behavior. It’s a three-digit number that shows lenders how reliable you are with money. As is the case with results, the higher your score, the more financially trustworthy you appear to lenders. On the flip side, a low score can make borrowing money more difficult and expensive.

Have you ever applied for a loan and received a mysterious rejection? It might have had something to do with this credit score we’re speaking of. How high or low your credit score will look depends on what credit bureaus find in your financial history!

What is a Credit Bureau?

Credit bureaus are like financial watchdogs. You could also call them the gatekeepers of your credit information. They collect data on your borrowing and repayment habits from banks, lenders, and even utility companies. Then, they use this information to calculate your credit score. Nigeria has three major credit bureaus: 

• CreditRegistry
• CRC Credit Bureau,
• and First Central Credit Bureau.

How to Check Your Credit Score

Checking your credit score in Nigeria is easier than you think. Most credit bureaus offer online platforms where you can register and generate your credit report for free or a small fee. All you need is your BVN, email, and some personal details to get started.

What Your Credit Score Means

The typical credit score in Nigeria ranges from 300 to 850 in Nigeria, based on the FICO scoring model. Here’s a quick breakdown:

• 300 – 499: Very Poor
  • Lenders may consider you a high risk and deny your loan applications or offer them at higher interest rates.
• 500 – 600: Poor
  • You may qualify for loans, but with less favorable terms and higher interest rates. Improving your score is essential.
• 601 – 660: Fair
  • You’re in the average range, but there’s room for improvement. You may get loans, but not always at the best rates.
• 661 – 780: Good
  • Lenders see you as a low risk, and you’re likely to get approved for loans with favorable terms and lower interest rates.
• 781 – 850: Excellent
  • Congratulations! You’re in the best range, so you’ll have no trouble getting approved for loans with the best terms and rates.

If you find that your credit score isn’t what you’d like it to be; don’t fret! Here’s how you can scale up

Quick Tips for Maintaining Good Credit Scores

1. Pay your bills on time: Late bill payments can negatively impact your credit scores because they imply you’re not financially responsible enough to meet due dates.
2. Keep your credit utilization low: Try to make use of less than 30% of your available credit. For example, if you have a credit card with a limit of ₦100,000, try not to carry a balance of more than ₦30,000 at any given time. When you use too much of your credit, it can signal to lenders that you’re overly reliant on credit and may be struggling financially.
3. Monitor your credit report: Check for errors and report any discrepancies immediately.
4. Avoid opening multiple credit accounts at once: Doing this makes you appear risky to lenders. It may seem like you’re in financial distress and could potentially overextend yourself, making it harder to manage repayments.
5. Limit credit inquiries: Too many inquiries in a short period can lower your score.

There’s no one guaranteed solution to fixing or maintaining a good score, but following these rules can help. 

In A Nutshell…

Try not to think of your score as just a number because it’s more than that. It’s essentially a snapshot of your financial responsibility. Whether you’re applying for a credit card, a loan, or sometimes even renting an apartment (some landlords are very strict), your credit score plays a crucial role. So, check on your score regularly (not too frequently), spot any errors, and take steps to improve it if necessary.

In Case You Missed Them:

• From Zero to Hero: Your Guide to Landing Clients Online (Without Selling Your Soul): Learn proven tactics to secure your first clients, scale your business, and easily land high-value gigs
• The Best Time to Pay That Credit Card Bill: Looking to boost your score? Paying your credit card bills at the due date may not be your best option
• Debt Relief: Knight In Shining Armor or A Trap? Debt relief can ease the burden of overwhelming debt, but is it really right for you?

That’s it for this edition, folks! Remember, knowledge is indeed power, especially when it comes to your finances.

Until next time,

The SimplVest Team