Check your credit score

2018-07-04 06:02

A person’s credit score is more influential than any other reference they can provide.

Keeping an eye on it often enough will be able to detect potential errors, or even identity theft.

Most South Africans do not know their credit scores, even though the three digits that represent one’s credit worthiness are among the most important financial information there is about you.

Emphasis is therefore made by Mocheko Chaka, head of Pulse at financial services provider DirectAxis, why it is critical to be able to respond quickly to a downward change in your credit score and how to check it regularly.

Your credit score can determine whether you qualify for loans, what interest rate you will pay, whether you will be able to finance a new car or if a landlord will consider you to be a suitable tenant or whether you qualify to be a potential employee.

Credit records is reported to being more influential than any other reference you can provide, so checking your credit score once a year may not be enough.

Chaka said by law a person is entitled to one free credit score annually from any of the credit bureaus.

“A lot can happen in a year and if there’s a sudden downward change in your credit score you need to respond quickly.

“It could be anything from an error to identity theft,” Chaka said in a statement.

Three reasons are provided as to why and how to keep an eye on one’s credit score:

  • Knowledge is power

It pays to know your financial profile – literally.

A better credit score will enable you to get better interest rates on loans and other credit facilities.

Although the credit bureaus will only provide one free credit score a year, there are other ways to keep tabs on how well or poorly you are being rated.

There are free online tools available that enable one to access your financial rating.

It also explains how the rating is calculated, tracks it over time and provides information about what you can do to improve it.

  • Early warning stops mistakes and scams

Credit bureaus can and do make mistakes. You are more likely to pick these up if you regularly check your credit rating.

A sudden drop may indicate that something is wrong.

If this happens you can contact a credit bureau to find out why and if there is not a reasonable explanation, it may be a mistake.

The other possibility is that someone is using your personal details illegally, posing as you to borrow money or open accounts. The sooner you find out about this, the faster you can react and minimise any damage.

Chaka pointed out that a common misconception is that regularly checking your score or using an online tool negatively impacts your credit profile.

“While it is true that some credit checks, such as in-depth checks by banks or other financial institutions can affect your score, trustworthy online tools do not.”

  • Checking gives you control

Online tools provide information about what is influencing the rating, and gives you a good understanding of how to improve it.

By limiting negative behaviour, such as not paying accounts on time, and responsibly managing your debt you can gradually increase your credit score.

“There are lots of reasons people do not check their credit scores. They think it is too difficult or are scared of what they might find.

“The reality is with the online tools available, it is quick and easy to do and knowing what it is puts you in a better position to maintain or improve it,” Chaka said.

“It’s how the financial world sees you and by understanding the sort of impression you are making you can do something about it.”

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