Tips to improve your credit score
"If you default on payments or pay late, your credit profile is affected, which could make it much more difficult for your applications to be approved when you are trying to get ahead in life."
As many citizens face increasing financial hardship because of Covid-19, African Bank says this is a good time to consider your creditworthiness.
“The pandemic has impacted many South Africans’ earnings,” said Head of Customer Experience at African Bank, Eloise Boezak.
“However, defaulting on payments and applying for more credit could negatively affect their credit report and your score going forward.”
Boezak said it was important to check your credit score as one could reach a stage they would have to apply for, for example, a loan to fund their child’s education.
“If you haven’t checked on your credit score first, your application may well be rejected.”
She said many people paid little attention to their credit score until it was too late.
“It is concerning to see that just 9% of the 25 million credit-active South Africans, access their credit report annually.”
Boezak has taken the opportunity to explain to consumers why it is much easier to build a good credit profile from the start than trying to repair a broken one.
She said citizens needed to understand the difference between a credit score and a credit report.
“A credit score is a three-digit number created by a Credit Bureau to explain your credit behaviour.
“It is calculated based on the latest information it receives from your credit and service providers using a formula that looks at how much debt you have and how well you pay your accounts,” Boezak said.
She said generally, the higher your score, the better, however, each credit bureau had its own scoring method.
“Your information, both positive and negative, is stored by the various credit bureaus.
She said to get good credit, “it is better to have credit”.
Boezak said that good credit profiles are gained when you borrow money and pay it back regularly, on time, and for the full amount.
“If you default on payments or pay late, your credit profile is affected, which could make it much more difficult for your applications to be approved when you are trying to get ahead in life.
“While adverse information is cleared as soon as your repayments are up to date, or the account is paid up, the negative repayment history or any judgements against you, remains for years,” she said.
“A good credit score will help you reach your financial goals much more easily.”
She gave the below tips to improve your score:
– Check your credit report.
– Manage your accounts.
– Limit your amount of debt.
– Address negative listings.
– Grow your credit history.
– Limit your enquiry activity.
“It’s never too late to begin working towards an improved credit profile,” Boezak said.
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