7 ways to get a good credit score

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Photo: Getty Images/Gallo Images
Photo: Getty Images/Gallo Images

Life is expensive, and as prices of even basic goods soar many people are  forced to turn to credit to  put food on the table – let  alone to buy the table.  The trouble is our credit records aren’t good.

Many South Africans make heavy use of financial products such as loans and credit cards without thinking about the effect these products have on their  credit scores.  Indeed many people aren’t even aware that credit scores exist or that they have a knock-on effect on our future borrowing.  And they remain blissfully ignorant until their bond application is turned down or a cellphone provider refuses to offer them a contract. It’s only then that the real effect of credit hits home.

So here are some tips to help you get to grips with your credit score and learn how to manage your debt responsibly:

How to get a good credit score

 If your credit score is already low, it can take a long time to repair the damage and restore your  record to a level lenders feel comfortable with.  However, it’s not impossible. 

DON’T MAX OUT

 If you’re using a financial product such as a credit card, don’t push it to the limit each month.  This can be a sign of reckless spending  or unbalanced finances. Use no more than 75% to make your credit  use appear more measured and  responsible. And try to pay off debt rather than move it around.

 PAY ON TIME

 Certain credit score factors are more  important than others and payment history  is usually one of the top considerations in  most credit-scoring models. This means you can positively influence your  score by paying all your bills on  time as agreed every month.  Make this a priority.

 LEAVE  LOVE OUT  OF IT 

In the first flushes of love it can  be tempting to dive in and join every  part of your lives, including your  finances. Unfortunately, if Mr or Miss Perfect has a less-than-perfect credit history it can mean big trouble for  the other party, especially if your  joint finances take a turn for  the worse.

 GET  STABLE

 A flighty, risk-taking existence might sound  exciting, but it’s no good  for those looking to improve  their credit scores. Regular changes of address or jobs can be considered signs  of instability that can  affect your rating. 

KNOW YOUR SCORE

Knowledge is power. Even if the news is bad, knowing your credit  score is important so that you’re  aware of whether you need to change  it. Companies such as Experian  (experian.co.za) and TransUnion  (transunion.co.za) offer free  credit checks – just watch out for sneaky extra  charges. 

GET IT SORTED AND STAY THERE

 Poor credit doesn’t have to haunt  you forever. Older credit problems  aren’t as important as new  ones – they fade with time and  recent good payments are  reflected on your credit  report.

WHY IS IT IMPORTANT?

 Having a good credit rating will make a considerable  difference in your life in both practical and financial  terms. A good rating will mean you’re likely to be approved  for most basic financial products, although you might not  have access to special rates and high-level products  (you’ll need a very good or excellent score for this). 

By contrast, a poor or very poor rating will make it much more difficult to access credit products such as loans and bonds. This might mean you’ll need to put certain life plans on hold – perhaps  you were thinking about getting finance to study further – and it  might prevent you from purchasing a vehicle via a finance plan  or getting a bond for a house. Even if you’re given a bond, a poor score will probably make it much more expensive.  Poor credit scores can also affect your potential work.

Many employers conduct credit checks  as part of their hiring process and if they see  you aren’t financially responsible they  might be hesitant to  employ you.  

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