What is a credit score?

A credit score is a measure of the level of risk you present to a lender. It reflects your ability to repay credit and helps lenders determine how much credit you may qualify for and the interest rate that may apply.

Why is a credit score important when applying for a home loan?

Lenders use your credit score to assess your creditworthiness when reviewing a home loan application. Your score may influence whether your application is approved, how much you can borrow and the interest rate offered.

Where can I find my credit score?

Your credit score can be found in your credit report, which is maintained by licensed credit bureaus and contains information about your credit history and financial behaviour.

How often can I get my credit report?

Consumers are generally entitled to one free credit report per year from a registered credit bureau. Additional reports may be available for a fee.

How is a credit score calculated?

A credit score is calculated using information such as your banking history, repayment behaviour, account history, outstanding debt levels, defaults, judgments and the overall management of your credit facilities.

What factors can negatively affect my credit score?

Missing payments, defaulting on loans, carrying excessive debt, exhausting available credit facilities and having judgments against your name can negatively impact your credit score.

Can my credit score change over time?

Yes. Your credit score is not fixed and may change over time depending on your financial behaviour, repayment history and overall debt management.

How can I improve my credit score?

You can improve your credit score by paying your accounts on time, reducing outstanding debt, avoiding missed payments, not defaulting on loans and using your available credit responsibly.

What should I do if there is an error on my credit report?

If you believe information on your credit report is incorrect, you should contact the credit bureau that issued the report and request that the matter be investigated and corrected.

Can debt counselling help improve my credit profile?

If you are struggling with debt, debt counselling may help you develop a repayment plan to manage your obligations more effectively and work toward improving your credit profile over time.

Is your credit score good enough for a home loan approval?

What you need to know

Credit scores explained

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. 

So, what is a credit score?

Your credit score shows how much risk you present to a lender. It’s a measure of your ability to repay a loan and, as such, it is used by lenders to determine how much credit you can get. So your credit score will partly determine how much

money you can borrow or the interest rate you will pay on that credit.

Your credit report is where you can find your credit score. You credit report contains information on your credit history and financial dealings. A lot of the information in a credit report is confidential and that’s why only licensed credit bureaus

maintain the credit reports and the information they contain.

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.

Inaccurate report?

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.
Viewing your credit report
You can get your credit report from one of the following credit bureaus in South Africa:

Experian 
www.experian.co.za/consumer-services/index 
Contact number: 0861 10 56 65

Transunion 
www.transunion.co.za 
Contact number: 0861 482 482

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.
How your credit score is calculated
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.
Improving your credit score
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.

Prepare for your next investment

Buying a property to use as an extra source of income can be a good way to add to your wealth. But, like all investments, you must do your research and prepare yourself with the right tools and resources before investing. Being well prepared will help you make better investment decisions and build a successful property investment portfolio.