Nigeria: Credit Score Methodology for Nigerian Market Developed

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28 August 2019

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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