Credit score meaning in South Africa
Before establishing what a good credit score in South Africa is, you first have to understand what a credit score is.
A credit score is a 3 digit number based on the information contained in your credit report. This number may differ slightly depending on the credit bureau you request your credit score from.
What is a credit report?
Your credit report is a detailed report based on your credit history. Again, the information contained in this credit report will differ slightly based on the credit bureau you request it from.
Get your FREE credit report compiled by one of the biggest, trusted credit bureaus, Experian.
Some of the information you can expect to see in your credit report is:
- A detailed list of credit accounts you have including, but not limited to, credit cards, retail or store accounts and loans.
- Payment history of these accounts including missed, late and on-time payments.
- If you have any judgements or accounts that have been handed over to debt collectors.
- Hard inquiries (if you’ve made a loan or credit application, this will be included in your report).
What is a good credit score in South Africa?
When looking at the range that Experian uses to give a credit score to its clients, this is what we know. With this scoring system, you want to aim for being, at a minimum, an average risk (611-628), and for first prize, a low risk applicant (660-750).
500 - 594 very high risk
595 - 610 high risk
611 - 628 average risk
629 - 659 low risk
660 - 750 minimum risk
What’s a good credit score to buy a house?
When applying for a home loan, you should definitely check your credit score. If you are a first-time homebuyer, it’s important to note that, while having too much debt is a bad thing, not having any debt is also bad.
If you have no debt or no credit history, your credit score will be 0 and banks will see you as a high risk when applying for a home.
If this is you, you should work on opening one or two store or retail accounts to help boost your credit score. This will show lenders that you can pay your debts on time and consistently.
There isn’t one credit score that can be pushed as a good one for buying a home as different credit bureaus use slightly different scoring systems. You should, however, try to be as minimal of a risk to credit lenders as possible. This would mean then, when using Experian’s scoring system, that you should aim to be in the 660 - 750 minimum risk category.
What credit score is needed for a loan in South Africa?
Generally, when applying for loans or any access to credit, it’s a good rule of thumb to be minimal risk to a credit lender.
If you currently have a bad credit score and you’re looking for ways to:
- Get a home loan
- Get approved for car finance
- Get a personal loan
Debt review, also known as debt counselling, can be your way to get a clean credit slate and credit record.
This will help you start afresh so that you can be in a better position to be:
- Approved for your home loan.
- Get the car of your dreams.
- Get the personal loan you want.
Read: Debt Counselling - everything you need to know
3 Ways you can improve your credit score
- Watch your credit-utilisation ratio.
- A credit utilisation ratio refers to how much credit you’re given and the percentage of that credit you actually use.
- Pay your bills on time each month.
- Late or missed payments are tracked on your credit report and affect your credit score. One good way to ensure your bills are paid on time is to automate your debit orders so that you don’t have to remember to make those payments each month.
- Reduce your current debt
- Having too much debt can negatively affect your credit score. You should work on reducing your debt. You can do this by paying more than the minimum monthly instalment.
- Reduce your monthly debt instalment by up to 50%.
- Reduce the interest rate on your loans which could end up saving you money on your total debt amount.
- Protect your home & car from being repossessed.
- This could help you reduce your debt term and even the capital debt amount you have owing.
- If you can’t keep up with your monthly debt repayments and you’ve missed more than 3 months repayments, you are probably over-indebted. While you may not be able to get back on your feet on your own, you can sign up for debt review to help you:
Fill out the contact form and let us contact you about our debt management solution today!
