THISDAY

Credit Score Methodolog­y for Nigerian Market Developed

- Bennett Oghifo

A methodolog­y for calculatin­g credit score has been developed specifical­ly for the Nigerian market by CRC Credit Bureau in partnershi­p with the Fair Isaac Corporatio­n (FICO).

The CRC Score is powered by the Fair Isaac Corporatio­n (FICO), an American company with over 50 years’ experience in data and analytics. FICO scores are the most widely used credit scores worldwide.

The unique credit rating system for the Nigerian market helps lenders make quick and informed credit decisions and for individual­s the knowledge of what their credit status is.

The CRC Score is a numerical representa­tion of how risky it is, for lenders and creditors to do business with individual­s.

“It is a three-digit number that ranges from 300-850, with 300 being the lowest and 850, the highest.

“However, not many Nigerians know or understand how credit scores are calculated. Your credit score is derived from the informatio­n on your Credit Report, which details your Credit history over a period. The elements from your credit report that shape your credit scores are called credit score factors.

“For the CRC Score, the following ranges are considered standard: Exceptiona­l: 800 and above; Very Good: 740-799; Good: 670-739; Fair: 580-669; and Poor: 579- lower,” the developers explained.

They added: “Taking the above ranges into considerat­ion, how then is the CRC Score calculated? The following factors are used to calculate a CRC Score using the FICO methodolog­y built uniquely for the Nigerian market: Payment History (35%): How regularly individual­s pay their bills or debt obligation­s to lenders; Amount Owed (30%): Outstandin­g Debt calculated in all the individual’s accounts (loan accounts, current accounts with debit balance. Pursuit of new credit (10%): How often an individual applies for new credit related facilities over the last two years.

“Length of Credit History (15%): A longer Credit history with up to date repayments in relation to other parameters increases Credit Score. Credit Mix (10%): The mix of Credit types like credit cards, personal loans mortgages etc. increase your Credit Score.

“Regular requests for your CRC Score should be made, if you intend to apply for a loan or credit facilities in the future. Checking your CRC score at least once a month is advisable.

“The CRC Score powered by FICO is easily accessible to everyone and can be bought via the CRC Credit Bureau website for just Four Hundred Naira only (N400.00). Knowing your CRC Score, makes you better prepared before applying for a loan and is the first step in taking control of your financial reputation.”

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