CREDIT MANAGEMENT
Your Credit Score
By Wasilwa Miriongi
I
t is not common practice for most
people to download their credit report
from Credit Reference Bureaus, some
are not even aware of how to access them yet
reference bureaus have existed for a decade
in this country. A friend once complained
to me why his credit score was just 246 on a
scale of 100 to 900 used by CRBs when he
owed no one! The main reason may be due
to the fact that he has not done anything to
improve the credit score.
Did you know that financial companies
who are assessing you for risk may already
be using these social media metrics to assess
your risk? A lot of personal information is
made freely available since most people tend
to opt in to the social media sites and leave
all their information open to the public.
The term ’Credit’ refers to the ability to
borrow money or obtain goods by paying
little or no money at the time of purchase.
It may also refer to your promise to pay the
original cost later or over time plus interest.
A number of consumer credit products
have interest element and this brings me
to Albert Einstein who once said that:
“Compound interest is the eighth wonder
of the world. He who understands it, earns
it ... he who doesn't ... pays it.”
Why then is credit denied? It could be
because of no credit history, too much
outstanding credit, credit not handled
responsibly in the past, or one is a victim
of fraud.
What is a credit report? It is a record of
your loans, credit cards, payments and
outstanding debts, also lenders report your
credit usage to companies called ‘Credit
Reporting Bureaus’
Whatever you do online is being logged,
tracked and stored and you can be sure
it will be used to rate and score you, no
matter how insignificant you may feel the
transaction may be. A good social media
score will get you a better credit score. In
A credit score is a number, based on an
analysis of a person’s credit file that repre-
sent the credit-worthiness of an individu-
al. Lenders use Credit Scores to determine
who qualifies for a loan, at what interest
rate, and what credit limits are applied.
78 MAL28/19 ISSUE
fact, there are companies that are already
making use of your social media/online
information and on-selling it.
It is not just banks that are interested
in information about you, any company
extending credit or assessing you for risk
will be interested in this data.
What is a Credit Score?
A credit score is a number, based on
an analysis of a person’s credit file that
represent the credit-worthiness of an
individual. Lenders use Credit Scores
to determine who qualifies for a loan, at
what interest rate, and what credit limits
are applied.
Technically, there are three types of credit
scoring: Targeted Scoring, Internal and
External Scoring, and Counter Party
and Facility Scoring.
There are two types of decisions that a
lender has to make, that’s to grant credit
to a new applicant, and also how to
deal with existing customers including
whether to increase their credit limits or
not. The techniques that aid in making
the first decision is known as application
scoring while the second decision is
called behavioral scoring.
A credit score is a number that helps a
lender predict how likely an individual is
to repay a loan, or make credit payments
on time. A credit score is a number that
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