What Credit Score Says About Your Financial Health


Bennett Oghifo

Credit score is coming into everyday usage thanks to the proliferation of financial technology (fintech) start-ups such as Carbon (formerly Paylater), Mamamoni and Renmoney that advance micro-credit to customers. This has necessitated the need for quicker assessment of the creditworthiness of potential borrowers.

A poor credit score could mean paying higher interest rates on credit facilities or loans if even approved at all. While a high credit score means borrowing money at a much lower rate because you appear more financially responsible.

The knowledge that both financial and non-financial institutions are using a number to determine if people living in Nigeria can access loans, credit facilities or post-paid services or not is not common knowledge. It is until they need credit facilities like loans or post-paid products that they are made aware of its existence and how important it is, to their financial lives and access to finance for both personal and business needs.

There is still a perception that loan granting is based on ‘Man know Man’ which for the most part, is no longer the case at least for the average Nigerian.

Credit scores are provided by credit bureaus. The CRC Credit Bureau provides this service at N400 (four hundred naira). The CRC score is a three-digit number ranging from 300-850 that summarises a borrower’s history of borrowing and paying back loans or post-paid services by allocating a 3-digit number that represents how risky it is to do business with such an individual.

“It is also a credit grading system, with 300 being the lowest grade like an ‘F’ in a report card and 850 being the highest which would be an ‘A’ or distinction in your report card,” said Tunde Popoola, managing director and chief executive officer of Lagos-based CRC Credit Bureau. “The CRC Score powered by FICO is easily accessible to everyone and can be bought via the CRC Credit Bureau website.”

The Fair Isaac Corporation (FICO) is an American company with over 50 years’ experience in data and analytics. CRC Credit Bureau in partnership with FICO developed a unique credit rating system for the Nigerian market that helps lenders make quick and informed credit decisions and for individuals the knowledge of what their credit status is.

It is also used amongst other criteria to determine the interest rate, a borrower will be charged if a lender decides to approve the credit line or loan. It is a numerical expression based on a level of analysis of an individual’s Credit Report and is used to represent how risky it is for lenders or creditors to do business with said individual.

In developed economies, it is normal practice for creditors to consider credit scores and reports before advancing loans, goods or services to another party with the understanding that payments are to be made in the future. This practice is catching up in Nigeria, as there are more credit activities taking place in the financial and non-financial sectors.

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.