Getting your loan application declined is frustrating, especially when you urgently need funds. The secret to loan approval in Nigeria often comes down to one critical factor: your loan eligibility score.
Whether you're applying for apersonal loan or abusiness loan, understanding and improving this score can unlock better interest rates and higher loan amounts.
What Is a Loan Eligibility Score?
Your loan eligibility score is a numerical representation of your creditworthiness, based on your credit history and factors such as income, employment status, and debt-to-income ratio.
In Nigeria, credit scores typically range from 300 to 900, with higher scores indicating better creditworthiness.
Lenders use this score for risk assessment purposes, from pre-qualification of customers to credit evaluation.
A strong score means you're more likely to repay loans on time, making you attractive to lenders.
Key Factors That Affect Your Loan Eligibility
Factor
Impact on Score
Weight
Payment History
Most critical factor
35%
Outstanding Debt
Affects debt-to-income ratio
30%
Length of Credit History
Shows financial maturity
15%
Credit Utilization
How much credit do you use
15%
Recent Credit Inquiries
Too many applications hurt the score
10%
Note: Percentages may vary slightly by lender.
7 Proven Strategies to Improve Your Loan Eligibility
1. Pay Your Bills on Time, Every Time
Payment history is one of the most important factors in determining your credit score. Late or missed payments can significantly damage your credit score and stay on your credit report for up to seven years. Set up automatic payments or reminders for credit cards, loan installments, and utility bills.
💬 Tip: Even a single late payment can cost you up to 100 points in your credit score.
2. Check Your Credit Report for Errors
Common errors include incorrect personal information, outdated account information, and fraudulent accounts or activities. Check yourcredit score regularly using platforms like CreditRegistry or CRC Credit Bureau. Dispute any inaccuracies immediately.
Your debt-to-income ratio is your gross monthly debt divided by your gross monthly income. Lenders typically prefer ratios between twenty and thirty-five percent. Focus on paying off existing loans before applying for new credit.
4. Keep Your Credit Utilization Low
Aim to use less than 30% of your available credit limit. If you have a ₦100,000 credit card limit, try not to exceed ₦30,000 in outstanding balance. Lower utilization shows lenders you manage credit responsibly.
5. Build Your Credit History Gradually
Credit bureaus track behaviour across platforms using your BVN—it's like your financial fingerprint. Start with small, manageable loans from reputable digital lenders and repay them promptly to establish a positive credit history.
6. Avoid Multiple Loan Applications
When you apply for loans with multiple lenders, all those lenders access your credit report. Hard enquiries on your credit report make you a high-risk, credit-hungry customer. Apply strategically with lenders where you have existing banking relationships.
7. Increase Your Verifiable Income
A higher income translates to a higher chance of loan approval. Document all income sources, including bonuses, incentives, freelance earnings, and passive income. Submit updated payslips and bank statements showing consistent deposits.
How Long Does It Take to Improve Your Score?
Improving your loan eligibility score requires patience and consistency.
Minor improvements can appear within 3-6 months of positive financial behavior, while significant score increases may take 12-18 months.
Focus on building sustainable habits rather than seeking quick fixes.
Common Mistakes That Hurt Your Eligibility
🚫 Changing phone numbers to dodge lenders: Your BVN links all your financial data—there’s no hiding. 🚫 Ignoring small debts: Even ₦2,000 overdue can hurt your score. 🚫 Closing old accounts: Keep older, well-managed accounts open—they strengthen your credit history.
Take Control of Your Financial Future
Improving your credit score is a gradual process that demands consistency and responsible financial behavior.
Start by checking your credit report, paying bills on time, and reducing unnecessary debt. Each positive step contributes to better loan terms and greater financial freedom.
Ready to secure better loan rates? Compare loan offers onnairaCompare and find lenders that match your improved credit profile.
Remember: Your money story can change with consistent, informed action.
Noëlla Lepdung is a writer who makes magic with all sorts of content, helping businesses find their voice and meet their ambitions with cutting-edge but human-first advertising. Her portfolio features brands such as Budweiser, The Coca-Cola Company, Nivea, Leadway Group, Honeywell Foods, Monieworx, Kimberly-Clark, and WAMCO.
