You probably know that your credit score is a big factor in getting a loan, but you may not realise just how much of an impact it can have on all aspects of your financial life. Your credit score can influence everything from interest rates and insurance premiums to apartment rentals and even job eligibility.
The good news is that it’s possible to manage debt successfully and even work towards improving your credit score.
Here are some tips:
- Know your status
Check your credit records at all credit bureaus. South Africans are entitled to one free report per year after which additional reports can be attained at a small fee. It is important to check the information that the various credit bureaus have on record of you to ensure they are up to date and accurate.
- If you don’t use it, lose it
Re-assess your monthly spend and reduce your credit limits accordingly. If you notice that you are spending on items, which you can cut down on, do so and close any retail accounts you no longer use.
- Stability and a higher score go hand in hand
A credit provider will consider how long you have worked at your current job and how often you move residences as part of the credit rating process. It is used as an indication of your stability, trustworthiness and risk profile in the event that debt has to be collected from you.
- Ensure that all your bills are in your name and keep proof of payments
If you have paid your debt off in a timely fashion over a number of years, chances are you can work towards a credit rating that could afford you a more favourable interest rate. It is therefore crucial to ensure that all your bills and debt that you are repaying is in your name so that you can benefit from a positive credit rating.
- Pay more than the monthly minimum
If you regularly only pay the minimum and make little impression on the total owed, your card company may see this as a sign of distress and may reduce your access to future credit. With every repayment try and pay a bit extra and keep a record of all slips and documentation after paying your instalments.
Pay your bills on time, every time
Late payments are the most common piece of negative information that appears on people’s credit reports and is often responsible for significant drops in their credit scores. When it comes to loans and credit cards, it’s important that you always make at least the minimum payments in a timely manner, each and every month, with no exceptions.
- Minimise new credit inquiries
Only apply for credit when building credit or if you need it. Turn down point-of-purchase credit card offers. Too many of these types of cards will have a negative impact on your credit rating.
Remember: if you need assistance in getting on track with your finances or if you find it difficult to meet your payments, contact Meerkat and we’ll be happy to help!