- Statistics show that only 3% of the 24 million South Africans with credit access and understand their credit reports.
- Your credit score is calculated by using the details on your credit profile and reflects a summary of your financial decisions.
- Your credit score is usually used by lenders, such as home loan and personal loan companies, to make decisions on whether they should lend to you or not.
- The higher your score, the better your credit health will be. This gives you an advantage, enabling you to borrow money at lower interest rates.
Your credit score may not mean much to you until the time comes when you need to leverage it for a home loan, vehicle financing, a clothing shop account, etc. It’s the first thing creditors look at when granting you a loan. They do a credit check to decide if you’re creditworthy.
A good credit score gives you more chance of obtaining the loan and getting cheaper interest rates. Knowing your credit record also means you can be more realistic when managing your finances.
Check your credit report and address any inaccuracies
You can not improve your credit score if:
Your credit score may not mean much to you until the time comes when you need to leverage it for a home loan, vehicle financing, a clothing shop account, etc. It’s the first thing creditors look at when granting you a loan. They do a credit check to decide if you’re creditworthy.
A good credit score gives you more chance of obtaining the loan and getting cheaper interest rates. Knowing your credit record also means you can be more realistic when managing your finances.
Check your credit report and address any inaccuracies
You can not improve your credit score if you haven't seen your credit report yet. With MyCreditStatus.co.za you can get your credit score within 2 minutes. Our reports are extremely easy to read and you will immediately see if there are any inaccuracies on your report.
Check that every detail is correct and up-to-date and dispute any mistakes. Errors can occur and correcting these errors is the simplest way to improve your score.
Pay regularly and on time every time
Be conscious of your outstanding debts as you will want to make sure your payment history reflects timely, regular payments. It helps to create a budget that includes paying off your creditors on a monthly basis, with at least the minimum payment, if not more.
Your payment history is the most important factor when it comes to your credit score. Get yourself onto a strict payment schedule and your good payment habits will be rewarded.
If you’re having difficulty keeping up with monthly payments contact credit providers before they contact you. You may be able to reduce regular payments to an amount you can afford.
Improve the way you utilize credit
Just because you have a R10 000 limit on a credit card doesn’t mean you should reach it every month. Experts recommend reducing your debt to credit ratio (credit utilization score), which means minimizing the gap between your credit limit and your due amount.
They suggest you keep your balance at about 30% of the limit, which would be R3 000 on your R10 000 limit. If you over-utilize credit, you can significantly lower your credit score.
Your mix of credit and how long you have used credit for can also influence your score. Lenders want to know that you can different types of credit over time. However, multiple applications for credit cards will lower your score.
Close old, unused credit accounts
Forgotten retail debt can negatively impact your credit record. Close any old, unused accounts but make sure to settle any small amounts that may be outstanding before you do so. The fewer credit lines against your name, the less risk for creditors.
Set up automated payments
It’s easy to forget to pay on the due date when making manual payments. Set up automated payments instead.
Don’t use revolving credit accounts
Revolving credit accounts usually attract high-interest rates. You pay back your debt in your own time which can negatively affect your credit score.
Check your partner’s credit
If you are married, creditors may want to look at your partner’s credit rating too. If this is very low, it might affect your loan application.
Get help from a financial adviser
A financial adviser can help you to draw up a financial plan to manage your finances and maintain a healthy credit record.
Improving your credit score is as easy as understanding what affects it. Knowing each factor that influences it, such as your payment history and the way you utilize credit, is the path to improving it.
The higher your credit score, the easier it is for you to obtain credit and the lower your interest rates will be. With a little hard work, you can improve your credit score by a significant amount and have more opportunities to reach your financial goals.
