What happens if your credit score is good? What is the importance of credit score? If you are looking for answers to these questions, you’ve come to the right place.
What is a Credit Score in Nigeria? A credit score is a unique credit rating system that shows lenders how risky it is to lend to an individual. A credit score is a 3-digit score Developed by the Fair Isaac Corporation (FIRC), based on your past and present credit behavior. This can range anywhere between 300-850, with higher numbers indicating responsible credit behavior trends.
All lenders look at your Credit Score before approving your loan application. In calculating the credit score, the following are the standard measures:
- Excellent 800-above
- Very Good 750-799
- Good 700-749
- Fair 650-699
- Poor 600-649
- Very Bad 300-599
Good Credit Score is thus necessary to get a loan/credit card approval. But there are many more benefits associated with a high credit score.
Here are 7 benefits of a credit score over 800 or just a good credit score in general.
Lower Interest Rates on Loans
Applicants with good credit score get lower interest rates. If you have a high credit score, lenders will offer you a comparatively lower interest rate for getting credit such as a personal loan, home loan or credit card.
Loans with low-interest rates are one of the benefits of a good credit score.
Loan with a longer-term
If you have a good credit score, you can get a loan with a longer repayment period. Choosing a long-term loan will result in reduced monthly payments. This will assist you to decrease your repayment load, allowing you to return the loan amount on schedule.
You may check your credit score online apply on the CRC Credit Bureau website.
CRC Credit Bureau also has a USSD code (5658#) you can dial to check Credit reports instantly. You’d have to be an MTN subscriber to use their USSD option.
You must understand how to check your CRC score because it is a major deciding factor in loan application acceptance.
Faster Loan/Credit Card Approval
A good credit score is an indicator of your creditworthiness, and this allows your lender to make decisions regarding your credit applications at a faster pace.
This is also helpful when you are in an emergency and need some quick funds and higher credit scores result in faster approval.
If you have a good credit score, you will be eligible for additional bonuses and incentives on your credit card in addition to a high credit limit.
Improved Chances of Higher Limits on Loans
A higher loan amount means increased risk for lenders. So, even if a loan is approved for a person with a low credit score, the quantum of loan provided may be much less than the loan applied for by them.
Easier to Get Higher Limits on your Credit Card
Higher limits on your credit card are generally decided based on your credit score and your income. With a high credit score, it is easier for your card issuer to increase your credit limit.
This is because a high credit score indicates responsible credit behavior and therefore, decreases the risk factor for lenders.
Increased opportunities to get Pre-Approved Loans from Banks
A pre-approved loan from a bank is a great way of getting a quick personal loan from a bank. However, these loans are not offered to every customer. A lot of scrutiny in the form of a good credit score threshold and your account balances happen before releasing a pre-approved offer.
If you have a good credit score, then you might have a higher chance of getting a pre-approved loan from your bank or credit card.
More Chances of getting a Long Tenure Loan
A longer tenure on a loan makes your equated monthly instalment lower which is ideal for your monthly finances.
However, from the lender’s perspective, a longer-tenure loan is riskier. But with a high credit score you could get approval on longer tenures for your loans.
In Conclusion
The importance of good credit scores is immense. In this article, we only spoke about 7 benefits and there are a lot more. Essentially, having a good credit score makes your life easier, and provides better access to financial products and services. In case your credit score is on the lower side, do not worry.
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