What Is Credit Worthiness and How Is It Calculated in South Africa?

If you’ve ever applied for credit, a loan, store account, vehicle finance, personal loan, or home loan, the bank first checked one thing: your credit worthiness. This is a measure of how risky it is to lend money to you, based on your financial behaviour and ability to repay debt.

Understanding how credit worthiness is calculated helps you know:

• why you may be declined for a loan
• how to improve your chances of approval
• what lenders are looking for
• how to improve your financial health

In this guide, we unpack exactly what credit worthiness means, and how it is calculated in South Africa, 

What Is Credit Worthiness?

Your credit worthiness is a score or risk rating that tells lenders how likely you are to repay the credit you apply for. The higher your credit worthiness, the more likely you are to:

✔ be approved for loans
✔ receive better interest rates
✔ access more favourable terms

A low score means lenders see you as high risk, and you may:

✘ be declined
✘ receive lower limits
✘ pay high interest rates

How Credit Worthiness Is Calculated in South Africa

Banks and lenders look at a combination of key factors when assessing whether you qualify for credit. These factors go beyond your credit score alone and paint a full picture of your financial behaviour.

Below are the main elements:

Your Credit Score

This is the primary indicator of financial reliability. It considers:

• your current debt usage
• any defaults
• late or missed payments
• judgments
• credit history length
• frequency of credit applications

A low score is seen as risky. A higher score indicates reliable borrowing behaviour.

Your Affordability

Even with a good score, you may be declined if you cannot afford new monthly repayments.

Affordability is calculated by comparing:

Income vs. Expenses vs. Current Debt Repayments

If your remaining income after expenses is too low (or negative), lenders see you as over-indebted. In these cases it may be worth considering debt counselling to regain financial control.

👉Check out how Meerkat can help regain control >>

Credit Utilisation

Credit utilisation is the percentage of your available credit that you’re using. For example:

If you have R10 000 total credit and have used R5 000, your utilisation is 50%.

In South Africa, a lower utilisation rate is always better. High utilisation signals financial pressure and may lower your score. Reducing card balances or increasing your limits can help improve this.

Payment Behaviour

Banks check whether you:

• pay on time
• have missed payments
• have defaults
• have accounts in arrears

A pattern of late or skipped payments is a strong indicator of financial stress and can significantly lower your credit worthiness.

Number of Recent Credit Applications

Too many applications in a short space of time can hurt your score and signal desperation for credit. Lenders prefer stable and measured application history.

Existing Debt Exposure

Lenders also review:

• how many accounts you already have
• your total outstanding balances
• how many products you’re managing at once

How Do Banks Use This Information?

Banks combine the above data to calculate your risk. If your risk falls outside their acceptable range, your application may be declined, even if you have a reasonable credit score.

This is why many consumers are surprised when they are refused credit despite “having a good score”: affordability and debt exposure play a major role.

Final Thoughts

Improving your credit worthiness is one of the most important steps you can take toward financial wellness. With the right guidance, small changes, such as reducing utilisation, improving budgeting, and paying on time, can improve your score and help you qualify for better financial opportunities.

Frequently Asked Questions

What is credit worthiness?

Credit worthiness is a measure of how likely you are to repay the money you borrow. It helps lenders assess your financial risk before approving credit.

What is a good credit score in South Africa?

While each bureau scores differently, in general, a higher score increases your chance of loan approval and better interest rates.

Can I get credit with a low score?

Yes, but your chances are lower and interest rates higher. Improving your utilisation, payment history, and affordability can help.

Why was my loan application declined even with a good score?

Most often, affordability is too low, meaning you don’t have enough income available after expenses to comfortably repay additional debt.

How can I improve my credit worthiness?

Common strategies include:

• paying accounts on time
• lowering credit utilisation
• reducing total debt
• avoiding unnecessary applications
• improving your budgeting

Watch this space for Meerkat's credit worthy assessment - Coming Soon!