Low Credit Score: What it is and its impact on your finances.

May 12, 2023

Product updates

The Credit Score is an important financial metric that lenders (Banks, Loan companies, etc.) use to assess your creditworthiness when you apply for a loan, credit card, and other financial products. A low score can have serious consequences for your financial health and limit your access, 

Kredete makes use of FICO Score to determine if a credit score is low or high. This is because, FICO score is one of the most reliable metrics lenders look at to determine whether you are likely to pay them back. Your financial history—including how often you pay bills on time and how much debt you have, appears on your credit report, and that information makes up your credit score. 

FICO scores range from 300 to 850. 300 being the lowest and 850 being the highest. 

This rating scale is based on information in your credit report, including payment history, amounts owed, length of credit history, types of credit, and new credit.

Here are some of the disadvantages of having a low credit score in Nigeria:

  • Limited Access to Credit: If you have a low credit score, lenders may view you as a high-risk borrower and may be less likely to approve your loan or credit card application. This can make it difficult to access credit when you need it, such as during emergencies or when making major purchases.
  • Higher Interest Rates: If you are approved for credit with a low credit score, you may be offered higher interest rates than someone with a higher credit score. This can result in you paying more in interest over time, which can increase the overall cost of your loan.
  • Limited Opportunities for Financial Growth: A low credit score can limit your ability to access financial products that can help you build your credit and improve your financial situation. This can make it difficult to achieve your financial goals, such as buying a home or starting a business.

We hope this information has been helpful in understanding the disadvantages of having a low credit score in Nigeria. At Kredete, we are committed to helping you improve your credit score and achieve financial success. By using our credit scoring and reporting services, you can monitor your credit score and take steps to improve it over time.

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