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Mar 15, 2023

Why your credit score is important if you need a loan in Nigeria

Maintaining a healthy credit score is crucial to paying off your debts on time and avoiding excessive borrowing. Doing so increases your chances of getting appr...


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If you've ever had to borrow money from a loan company or have plans of doing so in the future, then having a good understanding of what a credit score is, how it works in Nigeria, how it affects your loan-seeking opportunities, and how you can improve it is essential.

So what is a credit score?

A credit score is a crucial factor that determines your creditworthiness and how likely you are to repay borrowed money. It is a three-digit number, typically ranging from 300 to 850, and is based on your borrowing activities over time. The Credit Bureau in Nigeria is responsible for determining your credit score, and they collect data from various loaning agencies. The data collected includes your credit history length, repayment records, default payments, and the frequency of credit inquiries, among others. A high credit score indicates that you are a responsible borrower, while a low score suggests you are a high-risk borrower who may default on loan payments.

Below is the credit worthiness scale in Nigeria;

  • 720 and above: Excellent credit
  • 690-719: Good credit
  • 630-689: Fair credit
  • 300-629: Bad credit

What the scale means is that the lower your credit score, the lower your chances of acquiring loans and vice versa.

When seeking loans from lending agencies in Nigeria, your credit score plays a critical role in determining whether you will be approved or not. A high credit score (between the ranges of 690 and above) signals to lenders that you are a low-risk borrower and are likely to repay your loans on time. This, in turn, increases your chances of securing low-interest loans for various personal needs, such as buying a car or a house.

However, if you have a habit of accumulating debts from one lending agency to another, applying for loans frequently, and defaulting on your payments when they become due, you are likely to have a low credit score. This can make it challenging for you to access loans in the future, as lending agencies view you as a high-risk borrower who may not repay the loan as agreed.

It's crucial to maintain a healthy credit score by paying off your debts on time and avoiding excessive borrowing. Doing so not only increases your chances of getting approved for loans but also helps you secure favorable loan terms, such as lower interest rates and longer repayment periods.

It is possible for you to improve your credit score (If you have a low/bad credit score) with the following steps;

  • Examine your credit score from time to time:- To improve your credit score, you should review your credit history to know what might be working in your favor (or against you). Many banks offer free credit history report checks to their customers so checking in with your bank is a good place to start.
  • Limit or space out your request for new loans:- It is important you manage how often you apply for loans. If you apply too many times, you can further weaken your score. Try spacing out your applications or applying periodically to avoid this.
  • Clear your old loan debts:- Having debts on your credit history does not go away in an instant even after you have cleared them off but it goes a long way in telling the lending agency that you are capable of handling your debts.
  • Don't miss payment dates:- Having a good history of on-time payments can help you achieve excellent credit scores. To do this, you'll need to make sure you don't miss your loan payments on the due date because late payments can be reported to the credit bureaus and hurt your credit score. If you feel you might not be able to make your payment on the due date, it is important you communicate this to the lending agency.


Understanding your credit score is essential to managing your finances effectively and increasing your chances of getting approved for loans in Nigeria. Regularly reviewing your credit history report can help you identify areas where you need to improve and take steps to increase your creditworthiness.

To ensure you have a good credit score, it is recommended that you review your credit history report at least once a year before applying for a loan. This will give you an idea of what lending agencies see when they check your creditworthiness and help you make informed decisions about your financial choices.

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