How to Keep Your Credit Score High

If you’re looking for a loan, you’re going to need a high credit score. These tips will help you keep it on the up and up.

If you’re looking for a loan – perhaps you’re eyeing a new car, planning to buy a home of your own or launching a new business – you’re going to need a good credit score to access the funds you need. Your credit score is a reflection of your financial health: it indicates to a lender whether you’re responsible with your spending in terms of making repayments on the money you’ve borrowed, or whether you’re likely to be a risky debtor to them. TransUnion and Experian are the two main credit reporting agencies in South Africa, and they’re keeping track of your credit score for you and your potential lenders.

To keep yourself in your creditors’ good books and be able to access credit facilities, here are some tips to make sure your credit score is always on the up and up:

  1. Pay in full and on time

Credit card and store card payments, your bond, your insurance, your cell phone account – whatever bills you’ve got to pay at the end of the month, always pay them in full and on time. This is one of the most important aspects of your credit score. Remember, too, that being even slightly late with your payments will reflect on your score and could negatively affect your chances of getting a loan.

  • Keep your debt to a minimum

You should never have debt that you aren’t able to service. If you’re maxing out your credit cards month after month and struggling to make the repayments, you need to make some very serious changes to your spending habits before they impact your credit score (and other areas of your life, too). As a general guide: you shouldn’t be spending more than a third of your income towards your debts.

  • Close credit accounts you’re not using

Lenders want to see that you have a few lines of credit that you’re servicing regularly. The more you have, the more precarious your financial situation might seem. Keep your credit lines to a few key essentials, closing any that aren’t necessary or in use.

  • Make sure you have some credit history

If you’ve never had any credit before at all –  for example if you’ve never had a credit card or if you only use a pay-as-you-go cellphone – you might find it difficult to get a loan. This is because creditors will have no way of knowing how you manage your financial affairs. Start building up your credit score by getting yourself a credit card, making sure that you can afford the rates and fees and then paying off what you owe in time at the end of every month.

If your credit score has suffered a bit over the years, don’t worry. Just take responsibility and recognise that now’s the time to start making positive changes to your spending habits. Your credit score reflects the payments you’ve made (or haven’t made) for the past 24 months, and the longer the period of consistent payments, the better. Start today and your credit score will improve with the passing of every month.



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