MONEY CLINIC | How can I up my credit score?

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Credit Score Concept
Credit Score Concept

Seeking advice on how to increase her credit score a Fin24 reader writes:

Is it possible for you guys to help and advise how can I increase my score? 

Sebastien Alexanderson, CEO of National Debt Advisors responds:  

Thank you for recognising the importance of a good credit sore. Sadly, many South Africans only recognise the value of a good credit score when it is too late, and have become reactive as opposed to pro-active.  

Your credit score is perhaps the most important 3-digit number in your life. It is what lenders and creditors look at when you apply for a loan and a bond, and even prospective employers rely on it to gauge your suitability to their needs.  

Your credit score is based on the payment history on your credit cards, personal loans and retail store cards. Your score also takes into account how much revolving credit you regularly use, the types of accounts you have, how long you have had certain accounts and cards and how often you apply for credit.

I would advise you to follow these steps if you want to increase your credit score:

1. Make your payments on time

Always pay at least the minimum amount required on your accounts each month. Your payment history can account for 30 %– 40% of your credit score.

2. Keep your balances as low as possible

This applies particularly to your credit cards and revolving credit. If you have any extra cash, pay them into your accounts. The lower your balances are the better. It would be even better to try to keep the utilisation of your credit card to under 35% of your limit. If for example you have a limit of R10 000, try and keep your amount owing under R3 500.

3. Minimise your number of account enquiries

Try not to open too many accounts in a short period of time, especially when you are trying to increase your credit score.

4. Make the effort to get rid of the negative public record information on your account

Administration orders, judgments and defaults on your accounts are all an indication that you have, in the past, been unable to keep up with your debt repayments.

Make a concerted effort to pay off these debts, so that the negative information can be removed from your credit record.

However, the most important thing for you to do – is to get your credit report from all the credit bureaus, so that you may scrutinise it carefully and make sure that all the information displayed is correct.

All credit bureaus are mandated by the National Credit Regulator (NCR) to supply consumers with a yearly credit report, so that they may be aware of their credit score and standing at all times.

You may access your free credit score from any of the following credit bureaus:CompuscanTransunionExperianXDS

If you find any incorrect information displayed on your credit report, you may log a dispute and request and investigation, irrespective of the credit bureau.

This normally takes about 21 working days to complete.

If the dispute is within the ambit of the credit bureau, they will do the investigation free of charge. Just as it is important for us to be on top of our physical health (especially during the time of Covid-19) so should we strive to be fully informed of our financial health as well.

Knowing your credit score, and striving to improve it, is the responsible thing to do.

In it always in your best interest to maintain a good credit score.  

Questions may be edited for brevity and clarity.

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