How can I improve my credit score?
Your credit score is a number that reflects your creditworthiness and how likely you are to repay your debts. A good credit score can help you qualify for better interest rates, loan terms, and credit products. A bad credit score can limit your access to credit and make borrowing more expensive.
There are some steps you can take to improve your credit score in South Africa, such as:
When applying for credit, all credit providers will check out your credit score. Your credit score is a number that reflects your creditworthiness and how likely you are to repay your debts. A good credit score can help you qualify for better interest rates, loan terms, and credit products. A bad credit score can limit your access to credit and make borrowing more expensive.
There are plenty of ways to find out your credit score. Most credit bureaus will even let you check your score free once a year. You can Sign up at Transunion(ITC), Experian or Compuscan.
With these credit bureaus you have an option:
- Sign up and pay a small fee and get your report once-off or monthly.
- Get your free credit report once a year. Any one of the listed credit bureaus has these options.
Credit scoring can be complicated, what you need to understand, is that every payment or no payment will reflect. Learning to be responsible with your credit score can set you up to reach your goals.
One of the most important things, you can do to protect your credit health, is to research before applying for a loan, especially if you have bad credit. A low credit score does not necessarily mean that you have no options, but the available credit options will be limited if your credit score is not suitable.
Some Factors that affect your credit score:
- Payment history, (payments, late payments, no payments, judgements)
- Length of your credit history (how long have you been credit active),
- New credit or accounts,
- Accounts in use,
- How many monthly inquiries.
Know your credit score, and access your credit report regularly.
If you fall into the poor credit or high-risk category, the truth is you are going to end up paying more for a loan over shorter terms and chances are that you will most probably not get a loan. If your credit is bad, or lower than what you would like it to be, understand that it does not have to be that way, best is to build it up before taking out a loan.
The best way to do that is to start by paying credit that you have due, and keeping up the payments as your credit rating will only improve over time.
Tips to better your credit report
- Pay your credit on time: If your credit history indicates that you pay on time every month and pay at least the minimum due, your credit score will follow and reward you accordingly.
- Do not apply for too many loans at the same time: This can damage your credit score. Every time you take a new loan, open a credit card, open a new clothing or furniture account, the lender does a credit check, which in the short term can damage your credit score.
- Check for errors on your credit report: Check your credit report at least once or twice a year. Check if there is balances or instalments on there that shows outstanding even though you have settled it. You can then ask the credit bureaus to remove that listing. You can contact the party that listed that on your bureau and ask them to remove it.
- Try to avoid maxing your credit limit: Using your full credit limit can have an impact, on your credit score and your affordability, debt to income ratio. Which means that you might not get new credit until your current credit balance is lower.