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Written by CreditRegistry

How is My CreditRegistry SMARTScore (Credit Score) Calculated?

Credit scoring is an emerging means of decision-making in Nigeria. In recent times, personal finance is a major highlight for many persons. Because these scores are so important to people's financial lives, it is only natural to be curious about how credit scores work. The credit score is often referred to as a SMARTScore and both terms are used interchangeably in this article. A SMARTScore is a proprietary tool created by CreditRegistry, Nigeria’s Largest and pioneer Credit Bureau. 

What exactly does a SMARTScore measure? CreditRegistry does not reveal its proprietary SMARTScore calculator formula, but the calculation incorporates seven major components. These components have varying levels of importance.

What makes up your SMARTScore?

  • Arrears history
  • Credit lines opened
  • Amount owed
  • Demographic
  • Paid off credit lines
  • Length of credit history
  • Credit Enquiries

All of these categories make up your overall score, which can range from 100 to 999. No one factor or incident determines it completely. The higher your score is, the less risky you are to lenders. By understanding what impacts your credit score, you can take steps to improve it.

How does each category influence your SMARTScore?

Arrears history

Your arrears history accounts for 25% of your score. This shows you have paid your credit accounts consistently and on time. It also considers previous bankruptcies, collections, and delinquencies. The higher your proportion of on-time payments, the higher your score will be and vice versa. Every time you miss a payment, you negatively impact your score. Payments over 30 days late will usually be reported by your lender to a credit bureau and harm your scores. When it comes to your credit health, it is important to consider:

1. how far behind you are on a bill payment

2. the number of accounts that show late payments, and

3.whether you've brought the accounts up to date.

Remember, payment history is only a part of the credit scoring. So, while late payments are a negative, one or two mixed into an overall good credit picture will not hurt the credit score. Similarly, having no late payments does not guarantee a perfect score.

Credit lines opened

Credit lines opened comprises 20% of the scoring model. If you’ve opened a lot of accounts recently or applied to open accounts, it may suggest potential financial trouble and may lower your score. Also, when people apply for credit frequently, it probably indicates financial pressures, so every time you apply for credit, your score gets declines a little. Before taking a new line of credit>, it’s important to consider whether having that extra credit is worth the drop in your SMARTScore.

Amount owed

The amount owed makes up another 10% of your SMARTScore. This variable considers:

  • the total amount you owe
  • the number and types of accounts you have, and
  • the percentage of the money owed compared to your limit.

Part of the science of credit scoring is determining how much is too much for a given credit profile. Owing a great deal of money on many accounts indicates that a person is stretched to their limit. This implies that they are more likely to make some payments late or not at all. New loans may drop your score temporarily, but loans that are closer to paying off can increase it because they show a successful payment history.

The next major factor is the amount you currently owe in proportion to the credit you have available. A general assumption is that borrowers who always spend up to or above their limit are potential risks. Lenders typically like to see credit utilization ratios—the percentage of available credit that you use—below 30%. Although this component of the Smart Score focuses on your current amount of debt, it also looks at the number of different accounts that you have open and the specific types of accounts you hold. A large total amount of debt from many sources will hurt your score.


Demography typically explores the relationship between such details as gender, age, marital status, educational attainment, and other information about the individual and their creditworthiness. Marital status, for example, has the potential to influence individual SMARTScores as differences in credit problems exist between individuals and couples. Marriage and family research has long documented the link between financial problems, divorce, and bankruptcy. Another demographic variable, educational attainment correlates with several factors that could influence Smart Scores including general mental ability. Finding a positive correlation between age and SMARTScores suggests individuals tend to have higher Smart Scores as they get older. Remember, demography makes up only 5% of your SMARTScore, so one or two demographic variables mixed into an overall good credit picture will not hurt your SMARTScore.

Length of credit history

The length of your credit history accounts for 5% of your score. In general, a longer credit history will increase a score; however, consumers with shorter credit histories may still get high scores depending on other components that make up your score. This is why you should consider keeping your accounts open and active. Common sense dictates that someone who has never been late with a payment in 20 years is a safer bet than someone who has been on time for two years. The longer your accounts have been open and in good standing, the better. It may seem wise to avoid applying for credit and carrying debt, but it can hurt your score if lenders have no credit history to review.

Paid off credit lines

A line of credit is a type of financing that’s essentially a hybrid between a loan and a credit card. Similar to a credit card, a line of credit lets you borrow money repeatedly — up to a limit. Yet like a loan, the interest rates on a line of credit can potentially be more affordable than a credit card. If you open a line of credit and always pay by the due date, the account might help you improve your Smart Scores. But if you make late payments — even on an occasional basis — that same line of credit could hurt your scores instead.

When you first open a new line of credit, it could lower the average age of accounts on your credit reports. Since scoring models consider your average age of credit, a new credit account might make your SMARTScore drop — at least initially. As the line of credit grows older, however, it could help you here. Keep in mind, length of credit history is only worth 5% of your SMARTScore. So, while your average age of accounts matters, a line of credit might still help your scores overall if you pay on time, every time

Credit Inquiries

Inquiries on your credit report are one of the ways used to gauge the risk that you'll default on new obligations. Too many inquiries, especially in the past few months, might mean that you’re taking on too much debt or that you’re in some kind of financial trouble and are looking for credit to help you out. Inquiries can have a greater impact if you have few accounts or short credit history. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part and are only 5% of your SMARTScore.

Ultimately, the best way to help improve your SMARTScore is to use loans and credit cards responsibly and make prompt payments. The more your credit history shows that you can responsibly handle credit, the more willing lenders will be to offer you credit at a competitive rate. It is important to understand that your SMARTScore reflects only the information contained in your credit report because it is a key tool used by lending agencies. It is important to keep an eye on your credit report. That is the basis of your SMARTScore, so reviewing it at least once a year and correcting any errors on it is crucial.

Article written by CreditRegistry

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