The previous article covered the basics of credit cards. This piece tackles credit scores: what they are and how to build a stronger one.
What a Credit Score Actually Measures
A credit score, sometimes called a credit rating, comes from the financial information stored in your credit report. Every country maintains a body or institution responsible for holding these individual credit files.
Your credit report draws from your financial activity with banks and lending facilities. Whenever you apply for a credit card, lenders pull this report to assess your creditworthiness. The data tells them three things: whether to approve your application, how much credit to extend if approved, and what interest rate to charge on that credit.
Credit scores carry significant weight in these decisions, though they are not the only factor lenders weigh.
Governments and regulatory bodies, including Kenya’s CRB, have introduced policies protecting cardholders from exploitation. Lenders must disclose contract details and implications upfront, so cardholders know their charges in advance, understand the consequences of late payments, and see clearly how interest accrues. No hidden surprises.
Still, the primary responsibility for maintaining a strong credit rating rests with the cardholder. Here are seven ways to protect and improve your score.
Pay Bills and Loans on Time
In countries like the US, UK, and Australia, automatic billing for rent and mobile subscriptions directly affects credit scores, a practice still rare across most of Africa but gaining ground in urban centers.
Prioritize financial stability and avoid late payments on these recurring bills, since they will eventually shape your score. Bankruptcy filings carry even steeper consequences: that entry remains on your credit report for seven to ten years.
Avoid Delayed Card Payments
Repay your credit card according to the monthly terms you agreed to at signing. Delayed payments push your score down because they signal to lenders that you may struggle to service credit.
That signal follows you. Future lenders will flag you as high risk, resulting in lower credit limits and higher interest rates. If you already carry credit card debt, prioritize clearing it before making new charges.
Late and missed payments linger on your credit report for up to seven years, and lenders factor in this history even when your current payments are on track.
Check Regularly for Fraud and Identity Theft
Request your credit report periodically, whether annually or more often, to see exactly what lenders view when assessing your file. This habit catches errors, such as a payment mistakenly filed as late, before they damage your score unfairly.
Regular checks also surface unauthorized activity that could signal fraud or identity theft. Confirmed fraudulent activity stays on your report for 13 months if investigated, a safeguard that protects your score from damage you did not cause.
Spot an inconsistency? File a dispute immediately to get it resolved.
Watch Who You Are Financially Linked To
A woman once found herself paying off a credit card her mother had maxed out. After the daughter finished high school, her mother opened two credit card accounts, kept one under her own name, and handed the other to her daughter for college. Years later, when the daughter pulled her credit report as a financially conscious adult, she discovered her mother’s debt had become entirely her own responsibility.
Request your credit report often to avoid a similar surprise, and make sure anyone you are financially linked to maintains a strong score, since their standing can boost or drag down yours.
This applies within households too. Spouses who split financial responsibilities should ensure utility payments are recorded under the name of whoever actually pays. Otherwise, one spouse’s credit activity looks stronger while the other’s appears inactive, even though both are contributing equally.
Manage Your Credit Utilization Ratio
Lenders examine how much of your available credit you typically use. Keep your balance at 30% or below your limit. On a credit limit of 100,000 KES, for example, aim to keep your balance under 30,000 KES.
Limit New Credit Card Applications
Every credit card application generates an inquiry on your credit report, and that inquiry stays visible for two years. Opening several accounts within a short period signals risk to lenders and drags your score down.
Closing existing accounts, however, will not automatically improve your standing. Accounts you manage well, with low utilization and consistent, timely payments, actually strengthen your credit history and can help increase your available credit over time.
These seven practices form the foundation of a strong credit score. Consult your lender or explore further resources for additional strategies.
The next article in this series turns to the credit cards available from Kenyan banks and mobile banking platforms, and what sets them apart.
