Welcome to Tech My Money, a series that provides a real-life look into some practical tips you can use tech to make the most of your finances. Each installment dives into a financial concept that directly informs your money moves, and how to apply them using your smartphone.
Perhaps you may have come across the term “creditworthiness” when researching about loans. Creditworthiness is how a lender determines how worthy you are to receive a loan and what loan amount you are eligible for. It plays a major role when you need a loan application approved.
There isn’t an all-inclusive metric of being creditworthy — your likelihood of getting a loan approval also depends on a specific lender and the financial product. Your creditworthiness could even depend on when you apply, as creditors may sometimes loosen or restrict their requirements. Knowing what information lenders consider assists you in figuring out how to improve your chances of getting approved for a loan with favorable terms and helps you develop the habits you need to strengthen your overarching financial health.
Whether you have good credit, bad credit or need to start to build your loan history, everyone can benefit from developing some practical responsible financial habits. The journey to an excellent credit score is an intentional and tactical one. These three responsible financial habits can go a long way toward boosting your credit health.
Pay your debts on time, and if you can, earlier
Making on-time payments on all your loan accounts will help you maintain a good relationship with your lenders. Lenders care about the likelihood that you’ll pay back your debts.Doing so on time, every time establishes that you are trustworthy and should advance your overall creditworthiness. Making on-time payments on all your accounts including airtime advance services like Okoa Jahazi and mobile loans. If you have trouble keeping track of your bills, consider setting up automatic payments or payment reminders.
Check your credit report to see where you stand
If you have borrowed a loan before, you can access your credit report from a Credit Reference Bureau. In Kenya, we have three CRBs: Metropol, TransUnion & Creditinfo. It is good to check your credit report with all three agencies, in case one might be giving different information to lenders. If you spot any mistakes, contact the relevant agency as soon as possible and ask for them to be corrected. Checking your credit report can help you rebuild, maintain good credit and even observe any fraudulent behavior that may happen on your account.
Here’s how you can get your credit report from your phone:
Build a positive bill-payment pattern
It is important to know that your credit report does not include information about your payment of utility bills, for example, electricity bills or water bills. However, it is essential to pay these bills when they are due, or if you can, earlier. If you do not make payment on these services, some debt collectors may refer your debt to a credit reference bureau – asking them to record the default on your credit report.
As mentioned earlier, there isn’t an all-inclusive metric of being creditworthy. Your loan approval odds depend on the specific lender and the financial service they offer. However, knowing what information creditors consider could help you figure out how to improve your chances of getting approved for a new loan with favorable terms. Plus, it’s always important to build your financial knowledge and take control of your own financial health!
