Credit report plays a vital role in the financial sector in Nigeria, It helps lenders to assess the creditworthiness of individuals and businesses. The primary credit reporting system in Nigeria is operated by credit bureaus licensed by the Central Bank of Nigeria (CBN) under the Credit Reporting Act of 2017 namely: Credit Registry, CRC Credit Bureau, and First Central Credit Bureau Limited.
These credit bureaus collect, maintain, and analyse credit information on Individuals and businesses. They make the information accessible to financial institutions like banks, lenders, microfinance institutions, utility companies, telecommunications providers, and some other Service providers. The report helps lenders to make informed lending decisions.
Information obtained from Credit Reports:
The information provided by Credit bureaus typically includes:
-Contact Details of the Borrower (Address and Phone Number) and BVN
– Loan or credit History for the past seven years and recent Credit inquiries
– Payment history and Timeliness of payments
– Defaults and delinquencies
– Public records (e.g., bankruptcies, court judgments)
Sample of Credit Report Summary
Importance of Credit Reports:
Here are some key reasons why credit reports play such a vital role in the loan application process:
-Risk Assessment: Credit reports provide lenders with valuable insights into an individual’s credit history and behavior. Lenders can evaluate the level of risk associated with lending money to a particular borrower. Factors such as payment history and outstanding debts help lenders gauge the likelihood of timely repayment.
–Decision Making: A positive credit report, demonstrating a history of responsible borrowing and timely repayments increases the likelihood of loan approval. Conversely, a negative credit report, indicating missed payments, defaults, or high levels of debt, may lead to rejection or less favorable loan terms.
–Interest Rates: Credit reports influence the interest rates offered to borrowers. Individuals with good credit history typically may qualify for lower interest rates as they are perceived as lower-risk borrowers. On the other hand, borrowers with poor credit reports may be offered higher interest rates to compensate for the increased risk of default.
-Loan Terms: Credit reports can impact other loan terms such as loan amounts and repayment periods. Lenders may be more inclined to offer larger loan amounts and more favorable repayment terms to borrowers with strong credit histories as they pose a lower risk of default
-Access to Credit: A positive credit report opens doors to various credit opportunities, including mortgages, auto loans, personal loans, quick loans, payday loans, and Diaspora loans. By demonstrating responsible financial behavior and maintaining a good credit score.
-Financial Opportunities: Beyond loan applications, credit reports can impact other aspects of individuals’ financial lives. Landlords, insurers, and even prospective employers may review credit reports as part of their decision-making processes. A strong credit history can enhance one’s credibility.
How to Improve Your Credit Report
-Borrow responsibly
– Engage in timely payment on or before the due date
-Clear off all defaults and delinquencies
– Monitor Your Credit Report for regular update
Auto-credit check by Kwikpay Credit.
To make loan application easier, faster, and hassle-free, Kwikpay Credit owned by Trafalgar Associates Ltd, One of the top lenders in Nigeria approved by FCCPC has since adopted auto check of credit reports from at least two of the credit bureaus. This report is auto-generated online while you apply through our platform KwikPay at no cost to the applicant. Our loan products include Nano loan, Instalment Loan, Business Loan, and Diaspora loans. The auto credit check helps us to make swift, Precise, and productive decisions on your loan application over other lenders.
Conclusion:
Credit report plays a crucial role in facilitating access to credit and promoting responsible lending practices. By maintaining accurate credit information and providing individuals with access to their credit reports, Credit bureaus have contributed immensely to the development of a robust financial ecosystem. The Credit Reporting Act stipulates that individuals are entitled to one free credit report annually. By understanding how credit reports work and maintaining a positive credit history, individuals can increase their chances of loan approval, secure favorable interest rates, and access a wide range of financial opportunities.