There has been a lot of talk about credit scores, but what is a credit score?<\/p>\n
Simply put, a credit score is a three-digit number that reflects the likelihood of you paying back credit.<\/p>
The three digits are amongst the most important pieces of financial information about you, yet the majority of South Africans don\u2019t know their credit score, nor do they understand how to manage or improve it.<\/p>\n
Banks, finance companies, retailers and even landlords use your credit score to determine how financially dependable you are.<\/p>
A poor credit score could result in your not getting a loan, paying higher interest rates or not being considered for the house or apartment you had your heart set on.<\/p>\n
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Also read<\/strong>:\u00a0\u00a0Top five savings tips for more financial stability<\/a><\/p>\n <\/p>\n Despite being entitled, by law, to a free credit report annually from one of the credit bureaus, most South Africans seem unaware of how important this score is.<\/p>\n This contrasts with America where an Experian Consumer Services study found that 61 per cent of couples who married after the 2008 recession considered it so important that they discussed their credit scores before getting married.<\/p>\n There are other good reasons for finding out and improving your credit score.<\/p>\n Not least of these is that it could be wrong and people and companies are making decisions about your financial reliability based on incorrect information.<\/p>\n Checking your credit score can also reveal if anyone has been fraudulently using your profile to open accounts or borrow money.<\/p>\n Most importantly, knowing how credit bureaus determine your credit score means you can do something about improving a poor score or maintaining a good one.<\/p>\n Marlies Kappers, head of marketing at DirectAxis, explained that your credit score is calculated according to the information found in your credit report.<\/p>\n \u201cThis can include your payment history, the amounts you owe, activity on an account, how long you have held your accounts \u2013 the longer the better \u2013 judgements, defaults and enquiries about your creditworthiness,\u201d Kappers said.<\/p>\n <\/p>\n Also read<\/strong>:\u00a0Tips on how to land your first job<\/a><\/p>\n <\/p>\n Here are some helpful tips for managing and improving your credit score:<\/strong><\/p>\n \u2022 Check your credit report:<\/strong><\/p>\n Credit bureaus do make mistakes.<\/p>\n Make sure that all the transactional information in your credit report is yours and is accurate.<\/p>\n Look for late payments that may be listed incorrectly and check that the amount owed on each credit account is correct. Alert the credit bureau immediately if you find any discrepancies.<\/p>\n \u2022 Pay on time:<\/strong><\/p>\n Your payment record has a big influence on your credit score and even paying a few days late can negatively influence your rating.<\/p>\n If you have to pay regular instalments, consider setting up a debit order, so you don\u2019t forget and accidentally miss a payment.<\/p>\n Alternatively, put a reminder in your diary or calendar.<\/p>\n \u2022 Reduce what you owe:<\/strong><\/p>\n Use the credit report to list all your debts.<\/p>\n Arrange these according to the interest rates charged on each.<\/p>\n Try to pay off the ones with the highest interest rates first, while maintaining the minimum payments on your other accounts.<\/p>\n \u2022 Pay off debt rather than move it around:<\/strong><\/p>\n Limit revolving debt such as credit cards.<\/p>\n Don\u2019t apply for additional credit or accounts and do not increase your available credit as this could lower your credit score.<\/p>\n \u2022 Tell creditors if you have a problem:<\/strong><\/p>\n Keeping your creditors informed if you\u2019re having difficulties won\u2019t improve your credit score, but if you can negotiate a payment schedule, your score should improve over time.<\/p>\n \u2022 Outstanding debt will stay on your record:<\/strong><\/p>\n If an account is overdue it will negatively affect your score.<\/p>\n Making some payments or paying it off completely won\u2019t clear your credit record, but will improve it.<\/p>\n Be aware that information about your payment profile can stay on your record for up to five years and that closing an account doesn\u2019t make the payment history go away. It will still be reflected in your credit score.<\/p>\n What is your credit score?<\/strong><\/p>\n Have a story?<\/strong><\/p>\n Contact the newsroom by emailing: Melissa Hart (Editor)\u00a0<\/span>germistoncitynews@caxton.co.za<\/a><\/strong>or Leigh Hodgson (News Editor)\u00a0<\/span>leighh@caxton.co.za<\/a>\u00a0<\/strong>or\u00a0Kgotsofalang Mashilo (journalist)\u00a0kgotsofalangm@caxton.co.za<\/strong><\/a><\/p>\n Remember to visit the Germiston City News on the following social media platforms:<\/p>\n Facebook<\/a><\/strong><\/p>\n Twitter<\/a><\/strong><\/p>\n Instagram<\/a><\/strong><\/p>\n YouTube\u00a0<\/a><\/strong><\/p>\n Or add the GCN on\u00a0<\/b><\/span>WhatsApp 079 406 1181<\/strong>\u00a0<\/span>or\u00a0BBM (BBM Pin: 7F102137)<\/strong>\u00a0<\/b><\/span>today, to get all the latest news.<\/p>\n Catch-up on more local news with our sister newspapers\u00a0<\/span>Bedfordview Edenvale News<\/a><\/strong>,\u00a0<\/span>Alberton Record<\/a><\/strong>\u00a0and\u00a0<\/span>Kempton Express<\/a><\/strong>.<\/p>\n