Keeping SCORE

A good credit score can save you money, so building it is one of the smartest things you can do

- SYLVIA WALKER

A good credit score opens doors; a poor one means you’ll battle to get credit, and even if you do, interest rates may be higher. And at some point, we all need to apply for credit, whether to take out a cellphone contract or buy a car or home. Paying a lower interest rate saves money, so looking after your credit score makes financial sense. Take charge of your credit score so you can actively manage it. Start by checking your score with one of the many online services that provide free credit reports. Then, understand how credit scoring works and what you can do to keep it in good shape.

AIM FOR A SCORE OVER 600

South Africa has four main credit bureaus: Experian, TransUnion, Compuscan and XDS. A lender will request reports from multiple credit bureaus, and what is considered a good credit score may differ slightly between bureaus. According to Benay Sager, executive head at DebtBusters, a score in the upper 600 range is considered very good, and anything below 600 is considered poor.

CREDIT SCORE CALCULATION

Numerous factors are considered when determining your credit score:

✣ Your debt-repayment history

✣ How much of your available credit you’re actually using

✣ How many accounts you currently have, and how many you’ve had in the past

✣ How long you’ve had good credit accounts – the longer, the better

✣ What kinds of credit you have – the mixture of secured (home loan) and unsecured (such as vehicle finance)

✣ How frequently you apply for new credit – the more often you apply, the more it looks like you can’t make ends meet