The economy in Nigeria is growing very fast, serving as an opportunity for many. This growth is made easier by affordable lending that permits Nigerians to develop their life quality, expand their businesses and buy homes. Nevertheless, it can be frustrating if there is bad credit to acquire finances at an affordable rate and some lenders reject to lend. The causes of bad credit have been explored, alongside the method for Nigerians with bad credit to access affordable borrowing.
Bad credit is the process of taking loan, and the lender most of the times, carry out a credit check. The lender will learn how reliable the person is with financial agreement through the credit check, to justify if the loan is likely to be paid back. Importantly, the person who gives the loan out, with precautions, tries to avoid giving loans to people who will not pay back or miss the payments. However, a lender carries out a credit check to ascertain whether the loan is likely to be paid back. Succinctly, the credit score will display the risk the borrower poses to a lender.
56 percent of Nigeria adult population is unbanked.
A consideration is given to a borrower whose credit score is either good or fair, at a lower risk, in comparison to a person who has a negative credit score. There are special difficulties Nigerians encounter when applying for loans, and these problems can become more complicated as the banking system in the country undergoes more regulations. For instance, Nigerians with bad credit scores can access or borrow loans from unregulated organisations. Often times, these companies will give extremely high interest rate and without using a credit check.
It was evaluated from reports that some, out of many, of these organisations are fraud in the way they try to acquire money and borrowers should attempt to get loans from regulated companies only when at dire or desperate need of money. These organisations’ days are numbered as the regulation across Nigeria tightens. With this positive remark, it can pose difficulties for Nigerians who have bad credit in order to apply for credit elsewhere. 56 percent of the total population of adults in Nigeria, according to the World Population Review, is unbanked.
FG is making efforts to help unbanked citizens access finance.
Consequently, it is under probability that Nigerians may or may not have limited access to banking services. Hence, majority of the adults in Nigeria do not have any credit history at all. As services, products and banking practices develop to be more accessible, this unbanked number will drop as time goes by. Apparently, the government in Nigeria is making remarkable strides to help people that are unbanked access finance. According to estimation, all Nigerians will be privileged to acquire primary financial services in the future. There is always a means to improve the credit score and financial standing of a person who does not have a credit history or has a bad credit score in Nigeria.
Opening a bank account is necessary to take protective steps in accessing financial services. There are impediments to opening a bank account, but it is possible when efforts are made. Regular income and supply of information are required by financial institutions concerning a person’s profession, and documentations like tax returns or wage slips is the medium through which it is done. There are many banking apps that are helping people that are unbanked to get financial services if they have not opened an account with any bank. Majority of these banking wallets are based in the European Union (EU), safe, reputable, and are extensively regulated.
Criminal loan companies and scams are common in the sector.
Also, appropriate management of finances will be assured once access to a bank account is guaranteed. In Nigeria, there are many microloan companies, including charitable and regulated organisations. These companies help to develop good credit history without concern on high amounts of borrowing and oppressive interest rates. Criminal loan companies and scams are common in the Nigerian loan sector. In Nigeria, the government is working rigorously to transform the picture of the financial sector while the police are working hard to track down fraudsters in the country. It is pertinent that financial responsibilities are ensured by borrowers, protecting themselves from bad lenders and scams.
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