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Benefits Of Having A Good Credit Score

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To start with, what is a Credit Score? At least if we know what Credit Score it, it would be helpful to know why having a good Credit Score is important.

Credit score model was created by Fair Isaac Corporation commonly known as FICO, mostly used by financial institutions like Banks. Credit score is a portion of someone’s credit history. It indicates how likely a person is to pay a debt. When someone has a higher credit score, the better he/she looks to possibility lenders and the higher his/her chance of getting (more) loan or credits from a creditor or lender.

a good credit score

Benefits of Having a Good Credit Score

Generally, a credit score is based on:

  • How likely a person is to repay a debt
  • Determines what kind of loan one can get
  • Credit utilization
  • Length (Period/tenure) of credit utilization
  • Types of credit i.e. how many sources of borrowing e.g. Mortgage or car loan.

Do you know that a good Credit score can work in your favour while trying to get a job? Credit scores ranges from excellent to poor:

  • Excellent (800 – 850);
  • Very good (800 – 750);
  • Good (700 – 650);
  • Fair (600 – 650);
  • Poor (550 – 300).

To acquire a good credit score, you must be at the scale of 700 and above which helps you get low interest rate when you get a loan.

Here are some benefits attributed to having a good credit score.

1) Loan Interest Rate Reduction

A good credit score will earn you a low interest rate because the loan you obtain is linked to the history of your credit score. If you are an excellent credit scorer, you are eligible for a low interest rate on all loans given to you.

2) Ability To Bargain

A good or excellent credit score gives you the ability to bargain and your credit score is like collateral which guaranteed your ability to pay when you obtain a loan.

3) High Chances Of Getting Hired

When it comes to hiring, most companies want to know who they’re bringing into their system, in some cases, they make enquiry on candidate’s credit history. They request for your permission to perform a credit score check before sending you an offer letter. A good credit score is evident that you are a responsible citizen and good for their company. Most companies reject individuals with poor credit score and such applicants tend to find it difficult to get their desired job.

4) Easy Rental Application Process

Most landlords and property management companies look into a person’s credit score before renting out their properties. To acquire or rent a property easily, your credit score must speak well of you which means you must have a good or excellent credit score.

Most times, if you have a good or excellent credit score, you might not need a consigner. Your credit score history gives the landlord or property manager a sort of assurance that you will pay back as at when due.

5) A Good Reputation

A good credit score is something to be proud of; it helps you to stand out and gives you upper hand in almost everything. It increases your chances of getting things you want/need easily.

6) Less Insurance Payments

People with fair credit score have been observed to pay much more for their home insurance than those with excellent credit score. Most insurance companies use information from an applicant’s credit report and insurance history to develop his/her insurance risk score. So, what they do often is to place higher insurance premium on people with low credit scores.

7) Less Stressful Life

The benefits of having a good credit score go beyond your financial life; it makes you happy and live a less stressful life. It also help you focus on building your career and life since you don’t have to constantly worry about money or your account becoming red.

8) Reduction On Phone Plan Deposits

Most phone companies look into your credit card history before qualifying you for a phone plan. Your credit score distinguish you from high phone plan deposit or low phone plan deposit. If your credit score is low, you run on the plan of Pay As You Go but if you have a good credit score, you are qualified for a reduced deposit on phones.

9) Increased Credit Limits

Good credit score gives you increased credit limits which means lenders can borrow you more without the fear of you not paying back as at when due. A good credit score will increases your chance of getting more lenders when you apply for loans.

10) Shape Your Financial Future

A good credit score plays an important role in how you shape your financial future. Keeping a good credit score helps you greatly when making plans for a secure future like getting married, buying a house, starting a business, getting a car, huge investment and so on

Conclusion

Working toward an excellent credit score takes a lot of work. You have to be determined, focused, and diligent about the payment of your bills. Stick to your budget, avoid impulse buying, and buy what you need and can afford. Having a good credit score will create access to a lot of benefits which pay off for the effort you have put into getting a good credit score and when the benefits come, make sure you enjoy it to the fullest.

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Ekemini Ekpo is a professional Blogger, Research Analyst, Internet Marketer, and Tutor. He is passionate about Business, Investment, Entrepreneurship, Finance, and Personal development.

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Loan

Seven Out Of Ten Bank Loans Issued To Lagos State Residents

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How To Start A Loan Business In Nigeria

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One of the major challenges faced by SMEs is how to get money to start or run the business smoothly. Adequate capital is very important to the success of any business especially when the business is still at the startup stage. At this stage, adequate funds are needed to keep it running even before the profits starts to stream in.

In the quest to get adequate funding for their businesses, many business owners go from bank to bank trying to secure loans. This, of course could be frustrating and cumbersome most of the time. Due to the frustrating process and requirements involved in getting bank loans, many businesses have been forced to quit, relocate or change business lines.

Going to moneylenders for business financing is arguably a better option for getting start-up and running capital for most businesses today. Besides business and business financing, there are many individuals/paid employees today who are also in need of extra cash to pay for their piling bills or take care of the ever-increasing high cost of living before the salary comes in.

Starting a money lending business or loan business could, therefore, become a good choice for an aspiring entrepreneur who is interested in venturing into the Financial Services industry. Of course, you must have a considerable start-up capital and a good understanding of how the financial business climate works. By starting a loan business in Nigeria, you would solve a substantial part of the problem faced by many Small and Medium Enterprises (SMEs) and make appreciable gain in the process.

Starting a loan business in Nigeria

Starting a loan business in Nigeria

What is Loan Business About?

Loan business or Money lending is simply giving another individual/business money with a written agreement that the said individual/business would pay back the money with an agreed upon interest. It is a business that is lucrative and is not as heavily regulated as other financial institutions like Banks, Insurance Companies, Mortgage Houses, Mutual Funds Companies, etc.

This business of money lending has been delegated to various states in Nigeria and is being regulated by them. For example, in Lagos State, Section 4 of the Money Lenders’ Law of Lagos state defines a money lender as someone who lends out money at an interest or lends an amount out in lieu of getting paid back a larger sum of money. What this simply means is that anyone who lends money to get interest later on it is presumed to be a money lender. Note that this law only applies to people who are actively involved in the money lending business and not individuals who lend money to friends who are in need.

Business Structure of Loan Business in Nigeria

The main selling point for money lending businesses or loan businesses in Nigeria is the assurance of getting back an interest on a sum of money loaned out to an individual. It is no news that lending money can be a risky thing to do, especially to start-ups. This is why the interest rate has to be substantial to cover the potential risk of losing a particular investment.

A money lending business requires you to develop a good business structure and obtain all the necessary government licences. Starting out, you would most likely have to use your own money as a starting fund for your loan business. If this is what you wish to do which I strongly advise, you would, therefore, be running a Private Lending Business. “Private” in the sense that you would be the sole financier of the business without the need for investors.

A moneylender’s success lies in his/her ability to spot people that truly deserve a loan and weed-out those who could cause trouble in the future after obtaining the loan. Putting down a proper business plan and conducting adequate feasibility studies before starting the business will open your eyes to the likelihood of success or failure of this business and also the future growth opportunities it has.

There are various ways by which moneylenders offer their services such as checks cashing, instalment loans, advances on paydays, mortgage and other small credit services. These types of services cannot be provided by large banks.

Why Licensing Is Fundamental in Money Lending Business

Just borrowing people money does not automatically make you a moneylender. To be in this line of business, you have to be a licensed moneylender by the relevant government authority.

Before venturing into this business, you have to understand what you can and cannot do to get back the money owed you. There are situations where/when borrowers might not want to repay loans. In this case a licensed moneylender can institute an action in Court to recover the principal loan including the accrued interests.

On the other hand, a court action cannot be instituted by an unlicensed moneylender in a case of a borrower’s refusal to pay back the loan and/or the interest on the loaned sum. The only step he can take is to stand as an individual in court to get back the actual money borrowed but would have to forfeit the accrued interest on the loan.

Procedure for Obtaining License

To obtain your license for starting a loan business in Nigeria, please, visit any Magistrate Court in Nigeria having jurisdiction in the area you want to run the business, then apply with the following supporting documents:

  1. A cover letter addressed to the Chief Magistrate on your Company’s letterhead.
  2. Certified True Copy of CAC Form 2.
  3. Certified True Copy of CAC Form 7.
  4. Memorandum and Articles of Association of the Company.
  5. Certificate of Incorporation.
  6. Tax Clearance of the Applicant.
  7. Police Clearance from the Commissioner of Police.
  8. Evidence of Maintenance of current account with a licensed Bank.

After your application and the supporting documents have been reviewed and vetted by the office of the Chief Magistrate, a Letter and Forms B and C will be issued to you.

Please note that the objects in your Company’s Memorandum of Association must be clearly stated as a financial service or money lending business. Also, N20, 000,000 (Twenty Million Naira) is the minimum share capital required.

Upon getting the necessary Court documents, proceed to the Ministry of Home Affairs and Tourism to apply with the under-listed accompanying documents.

  1. Application letter.
  2. Money Lender Ordinance [Form B] 1938 – from Magistrate Court.
  3. Duly completed Form C- from Magistrate Court.
  4. Police Report from Commissioner of Police showing- fingerprints of individual Applicants/Directors/ Proprietors/.
  5. 3-year Tax Clearance Certificate, [including current year] / Development Levy for each individual Applicant/ Director/ Proprietor.
  6. Pay as You Earn [PAYE] Certificate, Tax Clearance of at least two (2) of its directors, and evidence of payment of Company taxes.
  7. Copy of Certificate of Incorporation and CTCs of Forms CAC 2 & 7.
  8. Evidence of payment of Application fees.
  9. Evidence of maintenance of a bank account with a licensed bank.

The government officials would visit the intended office where you wish to or currently operate from for physical inspection. This is the final stage. During this visitation, your records will be inspected if your company had already been running for a while unlicensed, engaging in the business of money lending. Else, only the office premises and officers would be inspected. If this activity goes well and the officials are satisfied with the compliance of the office with the perquisite statutory requirements, the Money Lending License Certificate would then be issued to you or your company.

Tips for Running a Successful Loan Business in Nigeria

If you’re planning on starting a money lending company: Here’s a list of the things you need to keep in mind

  1. Charge interest rates that are appropriate to the risks involved in the loan;
  2. It is always good to start with a small market to be competitive;
  3. Confirm the credibility of your client from two to three sources before engaging them;
  4. Make sure to check your customer’s insurance especially in the case of big loan amounts;
  5. Maintain a professional office space; keep it clean.
  6. Keeping a friendly environment can help show your clients that they can trust you;
  7. Make sure to keep adequate documents of every detail of your loan; and when the time is right – you can expand;
  8. Avoid creating artificial geographical limits for your company

Conclusion

Money is an essential commodity for every human and it is always in constant demand. After getting some money, people tend to need more money no matter how much they have because human needs are insatiable; as humans, we always need more. We need money to start off a business, to take care of bills, to buy ourselves luxuries, even to pay off loans. These necessities of life make people seek out loans on a consistent basis and this is where the money lending business comes in.

Having explained what is involved in the business of money lending above, you should be able to start and successfully manage a loan business in Nigeria any time from now. I carefully explained the processes to follow if you want to start a money lending business.

It is worthy to note that money lending business can be risky and also involves a large amount of work just like most financial businesses out there. However, having a good business plan with adequate knowledge of the industry, operating a loan business can turn out to be a very profitable business to do.

In case you are looking for a reliable company to get funding to start your loan business, you should try Sumotrust. The company is reliable, tested and trusted when it comes to supporting businesses to attain great heights in Nigeria and beyond.

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10 Best Loans Platforms In Nigeria Without Collateral

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Best Loans Platforms In Nigeria Without Collateral

A loan is money given to someone or businesses to cater to its financial needs. Most lenders need some form of collateral as security, before giving out loans.

Not every Nigerian can provide substantial collateral in order to receive loans, this is where loans without collateral comes in. Thankfully, there are now online platforms where individuals and businesses can apply for loans without the need to provide collaterals.

One major problem businesses face in Nigeria is the unavailability of capital. With these innovative online platforms, lenders can assess applicants and their ability to pay back the loans within the given time frame, and then go on to approve certain amounts of money for loan, based on their assessments.

Best Loans Platforms In Nigeria Without Collateral

One of the Best Loans Platforms In Nigeria Without Collateral, FASTCREDIT

Now, let me review ten most popular collateral-free loan platforms in Nigeria for individuals and small businesses.

  1. PAYLATER

Paylater is an online platform that provides loans to small businesses and individuals to cover urgent needs or unexpected expenses.

Clients can access up to N500, 000 worth of loan without collateral. Funds are delivered within 1 – 3 working days once approved. Endeavour to repay your loan on time to help increase your credit limits and grant you access to higher loan sums in subsequent loan applications.

  1. LYDIA.CO

This online platform gives businesses access to funding. LYDIA.CO Offers unsecured loans ranging from $500 to $15,000 to SMEs.

According to the founders, Lidya uses technology and algorithm for risk assessment that allows them offer financial services to their clients at low cost.

  1. QUICKCHECK

QuickCheck is an online lending outlet for small businesses and individuals. It helps individuals and small businesses to access financial credit by using mobile technology

According to the platform, customers can quickly and easily receive loans of up to N30, 000 without any collateral to repay within 15 – 30 days.

  1. SMEDAN

SMEDAN is more or less a federal government of Nigeria loan service or a government-backed enterprise for Small and Medium Enterprises (SMEs), hence the name (SMEDAN Small and Medium Enterprises Development Agency).

They offer quick and easy business loans to SMEs in need of funding. Their main aim is to promote entrepreneurship and provide startup capitals for businesses in Nigeria

SMEDAN also provides hands-on training and support to business owners. If you’re looking to apply for SMEDAN loan, then visit SMEDAN website and apply on the application portal – https://smedan.gov.ng/.

  1. AELLA-CREDIT

AELLA-CREDIT has been creating mediums to make funds easily accessible to individuals in Nigeria. The company is associated with 3 leading Credit Bureau Agencies in Nigeria to provide timely and affordable loans to clients. Employee empowerment and lending for business startup is the main focus of AELLA-CREDIT.

AELLA-CREDIT employs credit scoring algorithm, built after five years of market data and analysis had been gathered by the team, to assess the creditworthiness of applicants. The algorithm processes applicants’ eligibility by taking social and demographic factors as well as debit to income ratio of the applicants, into consideration.

  1. SPECTA

Specta is an online lending outlet that offers loans of up to N5 million in one deal, within the space of five minutes, without paperwork, collateral, or visit to any office. They enable users to cater for any urgent business or personal need, whenever and wherever.

Specta offers two loan services, which are (1) MySpecta which provides loan services for individuals and (2) Specta4Business which provides loan services for corporate and business owners.

  1. KIAKIA.CO

KIAKIA, taken from the Nigerian pidgin means “fast-fast” is an online lending platform for businesses in Nigeria. They employ the use of machine learning, psychometric, digital forensics, big-data, for credit risk assessments and proprietary credit scoring algorithm to help them provide immediate and compatible loans to numerous individuals without credit information.

Their services are highly efficient and effective in addition to being very simple and fast, hence their name which was derived from a Nigerian language, meaning ‘fast-fast ‘.

  1. ZEDVANCE

Zedvance is a client finance company geared toward providing individuals with consumer credit. They offer loans up to N3 million under 24 hours.

Their services are particularly for salary earners, but you could apply if you’re a salary earner with a side business.

  1. FAST CREDIT

Loan application on FastCredit is backed by guarantors although the loan itself is collateral-free. The validity period for the loan is 6 months maximum. If you are a micro, small and medium enterprises (SMES), then you are eligible to apply for this loan and use the funds to enhance the growth of your business

  1. GROFIN

If you are a small and medium enterprises (SME) in Africa and the Middle East, you may want to consider GROFIN as your choice loan platform.

Looking to grow your business rapidly and you are confident that your business meets the necessary requirements? Then, try GROFIN. This may be the perfect fit for you.

Business can access loans ranging from US$100,000 to US$1.5 million through GROFIN. You need to contact GROFIN and get the requirements. Upon reviewing the requirements and your business meets those requirements, go ahead and apply for the loan online on GROFIN website – https://grofin.com/business-loans/.

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