A credit score is a 3 digit number that reflects your credit history and how likely you are to repay your debts. Building and maintaining a good credit score works well in your advantage. A good credit score, depending on lenders can start from 700 and higher. When your credit score is good, lenders will readily lend you money and it also attracts lower interest rates.

So how do you build and maintain this credit score?


You start building your credit score from the moment you apply for your first credit. You don’t have a credit history if you have never borrowed, which means nobody knows your borrowing history and how likely you are to repay your loans. So borrow, take credits and start building your credit score but be reasonable and responsible about how you take credits.

Make payments on time

This is one of the most important factor that contributes to your credit score. Your payment history accounts for 35% of your credit score. Pay your loans and debts on time and your credit score will improve. Pay late or default on payments and this will affect your credit score badly.

Diversify Your Loans

Credit mix accounts for 10% of your Credit score. In building your credit score, use different types of loans including, home loans, auto loans, student loans and you get rewarded for this. Make sure you do not take on debt unnecessarily as this will have a negative impact on your credit score and finances in general, but use the right type of loan when necessary.

Prepare financially for each loan

Before taking a loan or any form of debt, prepare for it financially. Plan out the repayment, understand your income and expenses well enough to ensure that all things considered, you are ready and have the ability to make your payments on time and still take care of other financial responsibilities.

Borrow in moderation.

Credit scores look at how much you are currently borrowing compared to how much you are allowed to borrow. Do not assume “oh I can finance a total repayment of N500, 000 in 5 months since my income stands at N100, 000 per month”. Where you can, it is advisable to borrow less. If your monthly payments is taking up most of your income it could mean that you are struggling financially. So borrow in moderation.

Borrowing reasonably and paying back on time are the basic strategies that will help build your credit score. However, building your credit score takes patience as well, so be patient and strategic and you’ll be good.

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