Getting rejected? Here are 5 ways to improve your credit score

0:00
play article
Subscribers can listen to this article
To qualify for a bond, a credit score rating of 600 or more is required. (iStock)
To qualify for a bond, a credit score rating of 600 or more is required. (iStock)
  • A report by the National Credit Regulator has found that 40% of credit-active South Africans are facing an impaired credit record.
  • Poor credit scores contribute to rejection of home loan applications.
  • There are, however, ways to help improve your credit score and an expert suggests how.

The latest statistics released by ooba Home Loans reveal that 15% of home loan applicants are rejected owing to poor credit scores and a lack of affordability. 

Rhys Dyer, CEO of ooba Home Loans, says this has a strong correlation to the debt levels recently announced in TransUnion's Consumer Credit Index for the fourth quarter of 2020. 

"While many consumers are enjoying the advantages of a lowered interest rate, including lower monthly bond repayments, some are still struggling to repay their debts and keep their credit scores in check," says Dyer.

Out of 54 million consumer accounts measured, the Transunion report indicated rising defaults on credit repayments and weak cashflow. Furthermore, a report by the National Credit Regulator has found that 40% of credit-active South Africans are facing an impaired credit record. This means there has been a significant increase in an individual's credit "risk", according to Dyer.

To qualify for a bond, a credit score rating of 600 or more is required. Dyer advises that, if you're struggling with a poor credit score, or monthly repayment issues brought on by the pandemic, there are some options available. He provides some tips. 

Tips to improve your credit score 

Re-prioritise spending

Try to curb spending on your credit card and using money you aren't able to repay. 

"Your lifestyle should match your expenses; for instance, you shouldn't be driving a sports car if you aren't earning enough to comfortably afford this. Scale back where needed," suggests Dyer.

Pay the full amount, on time

Ensure your minimum debt instalments are paid in full, or over the minimum amount if possible, and on time. Failing to do so can damage your credit score.

Avoid multiple credit cards

Having multiple credit cards and loans, as well as applying frequently for new card facilities can weaken your score. 

The "right" amount of debt

Having manageable, healthy debt is beneficial, and a credit repayment history is in your favour, according to Dyer. However, too much debt, such as maxed out credit facilities, will negatively impact your score.

Debt reviews and insolvency

Dyer says one should be aware that applying for insolvency or debt review will negatively affect your credit score.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
USD/ZAR
14.62
(+0.1)
GBP/ZAR
20.04
(+0.1)
EUR/ZAR
17.38
(+0.1)
AUD/ZAR
11.14
(+0.1)
JPY/ZAR
0.13
(+0.2)
Gold
1,743.98
(0.0)
Silver
25.25
(0.0)
Platinum
1,204.50
(0.0)
Brent Crude
62.95
(-0.4)
Palladium
2,641.93
(0.0)
All Share
67,191
(+0.2)
Top 40
61,459
(+0.3)
Financial 15
12,123
(+0.8)
Industrial 25
87,544
(+0.1)
Resource 10
68,608
(+0.2)
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
21% - 1241 votes
No, I did not.
52% - 3105 votes
My landlord refused
28% - 1674 votes
Vote