021 180 4554 info@ezdebt.co.za

What is a South African Credit Score?

Unfortunately, not every South African has the luxury of not “paying back the money” and for those who don’t, this can result in penalties to your credit score that will affect your financial well-being well into the future. Having a poor credit score can result in you struggling to finance big-ticket items you may need such as a car or a house.

Unless you’re living off the grid or lucky enough to be extremely wealthy, you will have to rely on credit to purchase goods and services your monthly salary simply can’t handle in one go. As you make use of credit your details are registered with the different credit bureaus and a credit report is created for your specific use of credit.

When you apply for credit, most companies will require a report from a credit bureau to determine if you are a risk when it comes to giving you credit.

Why do I need a high credit score

Under the current economic climate in South Africa, at any given time there are around half of South Africans sitting with impaired credit scores. However, this is not all doom and gloom as each lender interprets credit scores differently and you may still qualify for finance under their terms.

This doesn’t mean you should take your credit score lightly. It’s important to know that, universally, the higher your credit score, the lower you are perceived as a risk to lenders – which means that you will get access to better terms and favourable interest rates when it comes to borrowing money.

How is my credit score determined?

The score is based on a few factors, including:

  • Credit application history
  • Payment history
  • Age of accounts
  • Number of late payments
  • The length of your credit history
  • Outstanding debt
  • Types of credit you’ve had

If you want to know more about what affects your credit score check out

How is my credit score measured?

Basically, a credit score is a number financial service providers use to see the likelihood of whether or not they will be repaid on time if they give you any form of credit. The score ranges from 330 to 830 and is more or less broken down as follows:

  • *750 + Excellent – you’ll receive excellent rates and packages from a debtor
  • *720 – 749 Very good – you’re a safe borrower and can get almost any amount you request
  • *680 – 719 Good – you can apply for almost any amount but there is no guarantee you’ll get approval
  • *620 – 679 Poor – you will struggle to get a loan and even if you do get one you’ll pay high rates
  • *619 below Very poor – it is almost impossible to get any credit

How to check your credit score?

Every South African citizen can request one free credit check every year. Even though the lack of credit makes for a higher score, you have to use credit (responsibly) to have a score. This means you must pay your instalments on time – try to pay more than the minimum if possible – to show that you are a good debtor.

You can use companies like Clearscore or TransUnion to apply for a credit check

How to improve my credit score?

Check Your Credit Report

Request a credit report so you know exactly where you stand and what exactly is affecting your credit score so you can deal with these issues promptly.

Setup Payment Reminders

If the debt you owe is within reason, you will need to take it upon yourself to service this debt and pay back the amount at regular intervals until your debt is fully settled.

Reduce the Amount of Debt You Owe

If you’re able to, try and reduce the amounts you owe by paying over and above the monthly requirements. This will help you reduce the interest charged on the borrowed money and help you save long term.

Debt review

If you need help on paying your debt you can always turn to services like Debt Review on credit card debt 

What happens if I can’t pay back the debt?

If you have you taken out too much credit? and are you unable to pay back your creditors this could greatly affect your credit score and you will need to act fast in order to reduce the long-term damages.

Thankfully there are ways to come back from debt and improve your credit score.  This situation can be reversed with the help of a debt counselling company like us at EzDebt.

Manage your debt effectively

If you still need help with your savings and you’re feeling overwhelmed by your current financial situation, feel free to contact us. To Speak to one our consultants about debt review contact us here.

EzDebt recommends

If you enjoyed this article you may also like – 12 Ways South Africans Can Handle Credit Card Debt

× How can I help you?