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Steps to raise your credit score

Hellen Njeri @PeopleDailyKE

Accessing credit facility can be a daunting task with insurmountable collateral requirements such as huge minimum deposits, hefty repayment rates and insufficient guarantors.

Coupled with  high cost of credit due to high taxation, inflation and interest rates, most Kenyans, especially, those in the middle class are faced with an uphill task of accessing credit. However, this need not be the case and If your creditworthiness is standing on the way here are some of the ways you can improve your chances of getting a loan.

1. CHECK OUT YOUR CREDIT REPORT

Get a copy of your credit details and facilities and see if there is an area you need to address. The credit reporting bodies use the same information to rate individuals. You are entitled to get one credit report every 12 months, or within 90 days of receiving a credit rejection. For a small fee you can request a report at any time.

2. ENSURE CREDIT FILE IS FAIR AND ACCURATE

Many Kenyans have errors on their files. It might be identity theft, or just a simple mistake by the lender. If there is a mistake on your report, you will need to contact the credit bureau or visit the financial institution responsible for the report.

3. CREATE A RELATIONSHIP WITH YOUR BANK

If you have got money regularly coming in, and a bit of a savings record building up, it is proof you are a sensible soul (and a good risk). Make sure your businesses are recorded with every transaction passing through you bank.

4. HAVE A CREDIT CARD

Oddly, having no debt at all does not make you more creditworthy. In fact, measured credit card use (and prompt on-time payments) is evidence of an ability to manage debt. If you are not good at managing a credit card, cut your credit card limit back. It is also wise to only use it for purchases you know you can afford to repay.

To pay your credit card and loans on time, have a reminder system so you are never late with your credit card bill. Even better, set up a direct debit (standing order) to cover your minimum payment. Your credit card and loan info is recorded on your report for two years.

6. DEMONSTRATE GENERAL BILL-PAYING RELIABILITY

Although your credit report does not include information about your payment of utility bills (electricity, water or gas) or phone bills (home, mobile and internet), it is important to pay these bills when they are due. If you do not make payment on these services, your credit provider may refer your debt to a debt collector and/or report your debt to a credit reporting agency asking them to record the default on your credit report.

7. DON’T CHANGE HOUSES AND JOBS FREQUENTLY

Lenders or financial institution value  stability and want evidence that you are a stable character. They want to see you have staying power that you are not here one day, gone the next. Put simply, they want evidence of stability so try not to change jobs and addresses too frequently.

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