Personal finance site launches free credit check

As February is debt awareness month, a personal finance website has launched a new feature, CreditSav, to provide users with free up-to-the-minute reports on their credit score.

“You can get the information you need quickly from your desktop or mobile phone and with the help of a coach if necessary, make informed decisions,” said JustMoney site’s operations manager Sarah Nicholson.

Nicholson explained that assisting people with accessing their credit score and record was important as many people did not understand what it was, nor its significance in playing a big role in their financial futures.

She said that credit scores were used by lenders, such as banks, to decide whether to give you any loans or overdrafts.

The score also determines the interest rate, which the borrower would be charged.

“If your report shows that you are high-risk, it’s because you’ve been unable to manage your debt and make regular payments. Your chances of being granted another loan or bond are very slim. Even if you are eligible, you will pay a higher interest rate than higher scoring consumers.”

The credit score takes into consideration both long- and short-term outstanding debt, the number of credit accounts open while also showing whether there were any judgements against the person and any debt counselling the person could be receiving.

Other features included showing the debt-to-income ratio and how the person measured up against other South Africans.

“Given the tough economic climate because of the lockdown, few of us can pay for a car or apartment in cash. Debt is unavoidable, so being able to obtain a loan or bond makes all the difference to your lifestyle,” Nicholson said.

Getting a loan at a lower interest rate would save the borrower thousands of rands over the payback period, she added.

“At the end of the day, the better your credit score, the better the deals you’ll be eligible for when you really need them.”

Nicholson offered a few pointers on what people could do to improve their credit scores:

– Pay accounts on time to avoid being labelled a slow-payer.
– Pay credit card balances in full every month.
– Open credit accounts only when necessary.
– Pay debt off as quickly and efficiently as possible.

“However, keep in mind that avoiding any credit will count against you as there will be no record of how you pay back a loan,” she said.

“The key is to take out a loan but to manage your finances well so that you keep up with the repayments regularly and build up a good record. This will stand in good stead when you want to purchase a larger asset like a vehicle or house.”

Nicholson further advised that rapid action was best if the credit score is poor or more than a third of the monthly salary went towards paying the debt.

“The best solution will depend largely on how indebted you are and whether you’ve missed any payments – debt consolidation is one possible solution that doesn’t affect your credit score,” she said.

It is largely focused on rehabilitating the debt and allowing the user to repay debt in a manageable and financially safe way, she added.

For more information visit JustMoney’s website at www.justmoney.co.za

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