It’s time to be intentional about your credit score – think of it as your VIP pass to better financial opportunities.
Cheslyn Jacobs, TymeBank Chief Commercial Officer says understanding and managing your credit score is crucial. It’s not just about the obvious things like getting approved for loans or credit cards but also about unlocking lower interest rates, better insurance premiums, and even increased trust from landlords or employers.
A strong credit score empowers you to make smarter financial decisions and opens doors to opportunities that can enhance your financial wellness.
Below Cheslyn shows you how giving your credit score the right attention can upgrade your financial status and transform your money game.
Curious about your credit score? Here’s how to check
South Africa has four main credit bureaus: Experian, TransUnion, Compuscan, and XDS. The National Credit Act means that everyone is entitled to get their credit report, free of charge, once a year from a credit bureau.
To access your credit report, you will typically need to provide personal information, such as your salary, bank account details, credit history, and other relevant data. Given the sensitive nature of this information, it’s crucial to choose a reputable provider. We recommend that consumers always research a company’s credentials and read reviews before sharing information.
How your credit score is calculated
Your credit score is typically a three-digit number that reflects your credit history, offering lenders insights into your financial behaviour. It helps them assess your reliability when making decisions about loan approvals, interest rates, and credit limits.
A higher credit score indicates to lenders that you’re more likely to repay your debts, increasing your chances of securing favourable terms. The score is not a permanent number and can vary from month to month based on your behaviour.
Several key factors influence your credit score, including:
· Payment history: Whether you consistently make payments on time.
· Credit utilisation: The amount of credit you’re using compared to your available credit.
· Credit age: How long your credit accounts have been open.
· Credit mix: The variety of accounts you manage, such as credit cards, store cards, home loan, and car financing.
Having a low credit score
A low credit score plays havoc in your financial life, affecting your ability to qualify for loans, secure favourable interest rates, finalise rental agreements, and may even be a reason you’re not considered for certain jobs. For job seekers, it’s important to note that potential employers look for signs of financial stress or irresponsibility, such as missed payments, defaults, or high debt levels, which could indicate a potential risk for theft, fraud, or reduced performance.
Fortunately, a low credit score isn’t permanent – it can be improved with the right approach. Here are TymeBank’s top five tips to help you turn it around:
1. Pay bills on time: Late or missed payments are one of the biggest factors that can drag down your score – and they can stay on your record for years. Set up reminders or debit orders to ensure you make every payment on time, every time.
2. Keep credit utilisation low: Aim to use less than 30% of your available credit limit. For example, if you have a R10,000 credit limit, try to keep your balance below R3,000. Paying outstanding balances or increasing your credit limit responsibly can help improve this ratio.
3. Avoid unnecessary credit applications: Each time you apply for credit, a hard inquiry is recorded, which can temporarily lower your score. Only apply for credit when absolutely necessary.
4. Check your credit report for errors: Mistakes on your credit report can harm your score. Regularly check your account information is accurate and scan for fraudulent activity. Reviewing your report and disputing any inaccuracies can help ensure your credit history reflects your true financial behaviour.
5. Build a positive credit history: If you’re just starting out it’s important to demonstrate responsible credit use. Over time, consistent and responsible use of credit will help you build a strong credit history, making it easier to access financial opportunities in the future.
Building a strong credit score isn’t an overnight success – it’s about creating sustainable financial habits that will serve you well for years to come. Whether you’re starting from scratch or working to improve your existing score, every positive action counts. Your future self will thank you for the lower interest rates, better loan terms, and doors that open more easily.
The best part? You don’t need a finance degree to make it happen. Just follow these proven steps consistently, stay patient, and watch as your credit score becomes a powerful asset in your financial toolkit. Ready to take control of your credit destiny? The perfect time to start is now.
Also see: Getting the best insurance quote? These tips make it easy
