When applying for a home loan or any other type of credit, you will come across the term ‘credit score’. Most of us know that a credit score is necessary to get any type of credit especially a home loan, but what is a credit score and how is it worked out? We’ve put together some simple information for you to understand your score and how it is used.
You can get your credit report from one of the following credit bureaus in South Africa:
Remember: You are only allowed one free credit report a year. You can get a second credit report, but you will be required to pay a fee.
Your credit score is based on your financial history. The credit bureau looks at your:
- Bank accounts.
- History of payments and accounts.
- How long you have had your accounts.
- Any judgements or defaults you may have had against you.
- How much you owe and have owed.
- How often your credit scored has been viewed.
Your score is then based on the above information. A high score means you will have access to credit, larger loan amounts and potentially better interest rates. A low score means you are likely to default on your loan repayments and may therefore have difficulties accessing credit.
It is important to remember that your credit score is not fixed - it will change as your financial circumstances change.
- Pay your accounts on time.
- Do not default on loans.
- Do not miss payments.
- Pay extra to get yourself out of debt.
- Reduce the debt you owe.
- Do not exhaust your credit facilities.
Your credit score is an indicator of your financial health. Keeping your score high will give you access to credit and loans when you need them most.
Struggling with debt?
If you are struggling with debt and account repayments, consider debt counselling. A debt counsellor can help you work out a plan to settle your debt and increase your credit score.
If you get a report from a credit bureau that you think is inaccurate, you must contact that bureau and try to resolve the issue. Remember your credit score reflects on you and directly impacts the credit you can access.
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