A credit score will get you better loan offers or none at all. It works both ways, you’ll need a good credit score for better offers and the offers will, later on, affect the score.
Let us show you how to boost and maintain your credit score.
What Is A Credit Score?
A credit is a number used by banks and lenders in South Africa to approve and provide unsecured loans. Credit providers will use your credit score to assume you’ll pay back the loan within expected terms.
The score is determined by credit bureaus in the country. These are responsible for generating your credit report that can be accessed by banks and lenders.
The report contains everything about your credit history, i.e. credit cards, overdraft loans, personal loans, store accounts, mortgage, etc.
Lenders review the report looking at certain factors such as your payment history. Basically have you been paying your previous and current accounts and loans.
How To Improve Your Credit Score?
Having a good credit history comes with many benefits and you’d want to keep that way – right?
1. Pay your accounts and loans in time
The best way to avoid missing an installment is by debit orders. Allow lenders to debit your account on a given date.
Late payments will affect your next credit report negatively, try to never skip months of payment on your bills. And improving a negative credit score takes time that you might not afford.
2. Stay In Your Lane
Many working-class people in South Africa have expenses that are more than their income. It’s a bad habit for most young people in the country.
You might want to prioritize your debt payments over anything else. Everyone wants financial freedom in their lifetime and credit cards and personal loans are always standing in the way.
Avoid using credit for restaurant bills and other “WANT” things. Focus on paying your bills and live by what’s left, therefor keeping your credit score intact.
3. Multiple Credit Application
Avoid applying for multiple new credits at the same time. For example, if one company declines your loan application, do not run and rush to another company for assistant. This is bad for your score and will get you in trouble in the next credit report.
4. Settling Your Accounts
Setting credit will certainly remove the financial burden off your shoulders – but could affect your credit score negatively as well. For a good credit score, you’d want to pay the bills on time as per your initial agreement with the lender.
5. Never Get Credit You Can’t Afford
As indicated, a good credit score will give you access to better credit offers to giving you the power to apply for anything you want.
Before you apply for credit, ensure it’s within your means and budget. Lenders will always look at your expenses before approving any credit however it doesn’t mean otherwise.
Ensure you stick to your budget to avoid over-indebting yourself.