How to Check Your Credit Score and Improve It

Your credit score is a fundamental aspect of financial management.

Not only does it empower you to make informed decisions, checking and improving your credit score also protects your financial well-being, and helps you work toward achieving your long-term financial goals.

Your credit score reflects your creditworthiness and financial health. By checking it regularly, you gain insight into how lenders perceive you and can identify areas for improvement.

Nigeria presently has three Credit Bureaus; Credit Registry CRC Credit Bureau as well as First Central Credit Bureau.

These are agencies that collect and relate credit-related information about individuals and businesses.

They collect financial data from various financial institutions including banks, lenders, creditors, public records, and sometimes from utility companies.

Understanding Your Credit Score

Credit scores are numerical representations of an individual's creditworthiness, providing lenders with an assessment of the risk associated with lending money to that individual.

Below is a detailed understanding of credit scores:

● Purpose

Credit scores are used by lenders to evaluate the likelihood that a borrower will repay a loan on time. They help lenders make informed decisions about extending credit and setting terms, such as interest rates and credit limits.

● Range

Credit scores typically range from 300 to 850, although the specific range may vary depending on the credit scoring model used. Higher scores indicate better creditworthiness, while lower scores suggest higher risk.

● Factors Affecting Credit Scores

They are calculated based on various factors, including:

● Payment History

● Credit Utilization

● Length of Credit History

● Types of Credit (e.g., credit cards, loans).

● New Credit

● Credit Scoring Models

Different credit bureaus and lenders may use different scoring models to calculate credit scores. Common scoring models include the FICO Score and VantageScore.

Nigeria presently adopts the FICO Score model which helps lenders determine how likely a borrower is to repay a loan.

● Credit Report vs. Credit Score

A credit report is a detailed record of an individual's credit history, including credit accounts, payment history, and inquiries.

A credit score is a numerical summary of the information in a credit report, providing a standardised measure of creditworthiness.

The FICO Scoring model ranges between 300 and 850. Using this model, here’s what your credit score says about your borrowing habits:

300 – 499: Very poor

500 – 600: Poor

601 – 660: Fair

661 – 780: Good

781 – 850: Excellent

● Credit Score Monitoring

Monitoring your credit score regularly allows you to track changes over time and identify any errors or discrepancies in your credit report.

● Impact on Financial Opportunities

Credit scores play a significant role in determining access to financial opportunities, such as loans, credit cards, mortgages, and rental agreements. Higher credit scores typically result in better loan terms, lower interest rates, and higher credit limits.

How to Check Your Credit Score

Checking your credit score is an important step in understanding your financial health and creditworthiness.

As stated, three agencies collect and relate credit-related information about individuals and businesses.

These are Credit Registry, CRC Credit Bureau and First Central Credit Bureau.

● Research these agencies to determine which one you'd like to obtain your credit score from.

● Visit the agency's website, create an account or sign in.

● You can then request your credit score by following the prompts on the website

● You may need to answer security questions or provide additional information to verify your identity.

● Review your credit report for any errors or inaccuracies that may be affecting your credit score. If you identify any discrepancies, follow the agency's procedures for disputing incorrect information.

Also, make it a habit to check your credit score and credit report regularly, especially before applying for credit or loans. Monitoring your credit allows you to track changes over time and identify potential issues early.

If you notice any negative items on your credit report or areas for improvement in your credit score, take proactive steps to address them.

By following these steps, you can check your credit score and gain valuable insights into your financial health and creditworthiness.

Improving Your Credit Score

Improving your credit score involves practicing responsible credit management habits, such as making timely payments, keeping credit card balances low, and avoiding excessive debt.

It is a gradual process that requires consistent effort and responsible financial habits.

By following these steps and adopting responsible financial habits, you can work towards improving your credit score and achieving better financial health.

Remember that improving your credit score is a gradual process, but the long-term benefits of better credit are well worth the effort.

Here are some steps you can take to improve your credit score in 2024:

● Pay Your Bills on Time

Consistently making on-time payments is one of the most effective ways to improve your credit score.

● Limit New Loan Applications

Avoid applying for unnecessary credit or opening multiple new accounts within a short period.

● Check Your Credit Report Regularly

Monitor your credit report from all three major credit bureaus regularly to check for errors, inaccuracies, or signs of identity theft.

● Diversify Your Credit Mix

Having a mix of different types of credit accounts, such as credit cards, installment loans, and mortgages, can positively impact your credit score. However, only take on new credit when necessary and manageable.

● Keep Old Accounts Open

Length of credit history is an important factor in calculating your credit score. Avoid closing old credit accounts, especially ones with a long history of on-time payments, as they contribute positively to your credit score.

● Use Credit Responsibly

Use credit wisely by only borrowing what you can afford to repay and avoiding excessive debt. Demonstrating responsible credit behavior over time will build positive credit history and improve your credit score.

By implementing these tips and adopting responsible credit management habits, you can work towards boosting your credit score in 2024 and beyond.

How To Check Your Credit Score On nairaCompare

Managing your credit score wisely is essential for maintaining good financial health and accessing favourable loan terms and other financial opportunities.

You can also check your credit score on nairaCompare for a fee by doing the following.

● Register on the website

● Enter your required details

● Wait for a report

Managing Your Credit Score Wisely

Managing your credit score wisely is essential for maintaining good financial health and accessing favorable loan terms and other financial opportunities.

Here are some things to avoid to maintain good credit:

● Don't Miss Payments

Late or missed payments can significantly damage your credit score and may stay on your credit report for several years.

● Don't Apply for Too Much New Credit

Applying for multiple new credit accounts within a short period can lower your credit score and may signal financial distress to lenders.

● Don't Ignore Errors on Your Credit Report

Address any errors or inaccuracies on your credit report promptly by disputing them with the credit bureaus. Errors could negatively impact your credit score if left unresolved.

By observing these steps, you can manage your credit score wisely and maintain good financial health over time.

Remember that building and maintaining a positive credit history requires consistency, discipline, and responsible financial habits.

You can also visit nairaCompare to get the best tips on how to manage your credit score wisely and maintain good financial health.