In this part of the world, having a new year resolution to build your credit history, may not be a typical resolution someone would make. Since it won't help you eat better, lose weight, get organized, spend more time with your family or travel the world, for example. However, when it comes to helping you get more money or reduce your debts – working towards having a good credit profile should be one of your top two resolutions for the new year.
"I resolve to make my credit history look better in 2018!"
The truth is that bad credit can kill your finances. You'll pay far higher interest rates on car loans, mortgages and even credit cards, that's if you can even get one. In short, you have to know that the better your credit score, the better lenders will treat you.
If you don't have an excellent credit profile, don't despair. Even though many people see credit scoring as this confusing, unknowable force, it is actually easier to understand and less complicated than you'd think, and a few right moves can make a big difference.
Learn the basics.
This is simple. People tend to overthink it. Achieving a good-to-great credit score really comes down to doing three things repeatedly for years:
1. Paying your debts on time every time
2. Keeping your balances low
3. Not applying for too much credit too often
That's basically it. Do those three things over and over again and your credit should be just fine.
Of course, actually doing these things is often far from simple – especially No. 2 – but knowing what is expected of you isn't. Just keep those three items in mind, and you'll have a basic road map to get where you want to go.
Increase monthly repayments … even just a little.
The first task for anyone with a loan is to pay the balance off at the end of every month. Unfortunately, that just may not be possible all the time, so the focus becomes determining how much you can afford to pay. If you haven't taken the time recently to calculate exactly what you can afford to put toward loan repayment, the first of the year is a good time to do so.
Paying off your debt faster doesn't just increase your available cash. It helps your credit score by dramatically reducing your "utilization rate" – how much debt you have compared to available credit.
Don't think that you have to make a huge jump in your payments. (Though if you can, you should.) Even a small increase applied over time will make a real difference in lowering your outstanding. As it does, your credit rating should move higher.
Get your credit reports and make sure they don't include any errors.
Few things can boost your credit more quickly and more significantly than fixing any errors on your credit reports, but you can't fix your credit report unless you look at it – and far too few people ever do.
CRC Credit Bureau offers you one free basic credit report (CRC Self-Enquiry) each year. A more detailed credit report can be ordered N5,250. To order, go to www.crccreditbureau.com/product/self-enquiry.
Once you have it, review it carefully and check for any inaccuracies. For example, there might be a late payment that you didn't actually pay late, or an account that you never signed up for. If you find something that doesn't look right, tell the bureau in writing. They'll then have 30 days to investigate the claim, and if the information can't be verified, the bureau must remove it and let you know.
It is not always that simple, however. It can take a few letters and phone calls to make it happen, so be persistent and don't take no for an answer.
Set up automatic payments.
Missing a payment can hit hard on your credit rating, so let technology keep that from happening.
Set up automatic payments online through your bank to ensure that you make at least the minimum payment to your loan account on time every month. That makes your monthly to-do list shorter and helps you avoid making one of the biggest credit mistakes you can make.
Remember: Don't settle for just paying the minimum. That's asking for trouble. Instead figure out a monthly amount over the minimum that works for you, and then bump it up from time to time if you find yourself with a little extra money in a given month.
Subscribe to CRC Credit Monitor (I-CON plus and CONplus)
CRC Credit Monitor is a proactive means of monitoring all your transactions in all the commercial and microfinance banks at a glance for one year. I-CONplus is for individuals while CONplus is for SMEs and corporate organizations.
The product delivers an easy, convenient and cost effective solution that enables debtors to proactively monitor their overall credit exposure and performance, through periodic email notifications that can be viewed on the go. For a token of N2,520/N10,250, you get a monthly e-statement of all your loan transactions and credit exposures, all in one place. So you can track your repayments at a glance.
Keeping an accurate credit history is very important to you. You run the risk of ruining your reputation and reducing your access to credit facilities for business and personal growth, when you do not monitor your loans and account activities regularly.
To subscribe, go to www.crccreditbureau.com/products
Take the first step … and then another … and another.
The most important step you can take toward improving your credit is the first one. Without that, nothing can ever be accomplished. Once you've taken that first step, though, it's important to do whatever you can to keep moving forward.
Enlist your friends or family as a cheering section.
Treat yourself when you've hit a milestone. (Just don't over do it and take your eye off the ball.)
Tweak your battle plan if it needs tweaking.
Above all, do something. Keep taking those steps. It won't always be easy, but once you get where you want to go – good credit, no debt – you won't believe just what a difference you've made in your life.