Smart Debt: Navigating Credit & Loans in Nigeria

In Nigeria, we are culturally conditioned to fear debt. "Gbese" (Debt) is seen as a curse. But in the modern financial world, Credit is Leverage. The richest people and biggest companies (like Dangote) use debt to expand. The problem isn't debt itself; it's what you use it for and how much you pay for it.

Before you borrow ₦1, ask yourself: "Will this put money in my pocket or take it out?"

Good Debt (Investment):

• Business Loan: To buy stock that you will sell for a profit.
• Mortgage: To buy a house (an asset that appreciates).
• Education: To learn a skill that increases your earning power.

Bad Debt (Consumption):

• Phone/Gadgets: Borrowing to buy the latest iPhone.
• Aso Ebi/Parties: Borrowing to impress people.
• Living Expenses: Borrowing to buy food (This is a sign of an income crisis, not a debt problem).

Yes, credit scores exist in Nigeria. Credit Bureaus like CRC, FirstCentral, and XDS track your repayment history.

Why it matters:

• A good score gets you lower interest rates.
• A bad score (or being blacklisted) stops you from getting loans from serious banks.

How to check: You can request your credit report via the CRC website or use apps like Carbon that show you a summary.

WARNING: Avoid unregulated loan apps ("Loan Sharks") at all costs.

Why?

• Interest Rates: They often charge 30% for 7 days. That is ~1,500% APR!
• Defamation: If you default by 1 day, they send messages to your contacts: "This person is a chronic debtor/criminal..."
• Privacy Violation: They scrape your data.

Stick to CBN-licensed lenders and banks.

If you have a salary or structured business, you have better options:

• Salary Advance: Banks like GTB (QuickCredit), Zenith, and Access offer loans to salary account holders at ~2-4% monthly.
• Reputable Fintechs: FairMoney, Renmoney, Carbon. (Always check the APR before clicking "Accept").
• Cooperative Societies: Join a "Co-op" at work. They offer the cheapest loans (often 5-10% per annum).

If you are drowning in debt, use these methods:

1. The Avalanche Method (Mathematically Best):

• List all debts.
• Pay minimum on all, but throw all extra cash at the one with the Highest Interest Rate.
• Repeat until debt-free.

2. The Snowball Method (Psychologically Best):

• List all debts.
• Pay off the Smallest Balance first (ignoring interest rate).
• The "win" gives you momentum to tackle the next one.