What is a Credit Score?
A credit score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of an individual. A credit score is primarily based on a credit report, information typically sourced from credit bureaus
How To Improve Credit Scores in South Africa
1. Check your credit report
Checking your credit report is the best place to start if you want to increase your credit score, as you can find out what your credit score is and see what you’re working with.
2. Make your payments on time
Consistency is key! Your payment history is a major factor when calculating your credit score. This is why it is essential to make your repayments regularly and on time, as even a few days late can negatively affect your score.
3. Pay off your debts
While this isn’t always possible, the goal should be to pay off all your debt, as you not only get to live debt-free but any outstanding debt makes a big impact on your credit score
Even if it’s small, you should create a realistic repayment plan that helps you prioritise paying off your debt.
4. Avoid spending up to your credit limit
Remember that you don’t have to use all your credit every month. In fact, for a good credit score, it’s recommended to keep your credit ratio below 30%. For example, if your credit card limit is R10 000, then try to owe less than R3 000.
You can help your credit ratio by increasing your credit limit, but keeping what you owe the same.
5. Settle and close any accounts you don’t use
Having too many accounts open can negatively impact your credit score. So it’s best to close any accounts that you don’t really use, as it reduces the number of accounts attached to your name, plus it’s less admin for you.
What is the fastest way to boost credit score?
The fastest way to get a credit score boost is to lower the amount of revolving debt (which is generally credit cards) you’re carrying. The typical guidance from personal finance experts is to use no more than 30% of your credit limit, which applies both to individual cards and across all cards.