How to Calculate Your Credit Score in Nigeria
Have you ever heard about credit scores? When you are trying to loan money from banks or money lenders, you will most of the time be asked about your credit score. It is important to know about credit scores, as it will show you how trusted you are in the eyes of banks, lenders, and many other financial institutions in Nigeria. This time, we will show you the credit score in Nigeria.
What Is A Credit Score?
A credit score is a score that shows a unique rating system that scored and represents the trustworthiness of each individual. It shows banks, or money lenders, how much they can trust each individual and how risky it is to lend money to each individual. This system lets lenders avoid bad investments and for borrowers to show how they can be trusted, making fair lending deals.
This system is developed by FIRC, or Fair Isaac Corporation, an American analytics company, to measure how reliable a person is and what their chances are for individuals to return their investment or loan money.
Basically, the better your credit score, the more trusted you are in the eye of lenders, and the better your chances that they will give you your loan. The lower the credit score, it will be riskier for the lender to give an investment. Most credit scores are three-digit numbers, ranging from 300 to 599 to very bad, 600 to 649 as poor, 650 to 699 as fair, 700 to 749 as fair, and 750 more as very good.
How To Calculate Your Credit Score In Nigeria?
How do lenders know your credit score? There is a way that credit score is measured and then calculated. However, there are a few deciding factors that calculate the total of your credit score in Nigeria, such as:
1. Payment history
It refers to how compliant you are in the eyes of the financial body and how you comply with the payment terms. Some factors are also affecting this, including how late your payment is, bankruptcies, and how you are always paying on time.
2. Pursuit of new credit
The more credit card you owe, the less reliable you are in the eye of lenders, hence a worse credit score.
3. The amount owed
The amount of money and debt you have will affect your credit score greatly.
4. Credit history
What is your credit payment history, and what are your responsibilities over the credit? The credit history will affect your credit score report greatly.
Why Is Credit Score Important?
A credit score is important because it shows lenders how reliable and trustworthy the individuals are. Hence it will ensure that they can invest and give loans to trusty people with the highest chance of repaying the loans.
As for individuals, knowing your credit score in Nigeria can help you feel in control of your financial position and see how your position is in the eye of most financial bodies. We also would recommend checking on your credit card regularly.
