Your Credit Record
Your credit record
What is a Credit Record?
Credit Record: A credit record (or credit report) in South Africa is a detailed record of your credit history. It contains information about your borrowing and repayment activities with financial institutions and other service providers, like banks, retailers, and cell phone networks.
What Does a Credit Record Include?
Loans: Your credit record will show details about any loans you have taken, including home loans, personal loans, car loans, and any other form of credit.
Cell Phone Contracts: In South Africa, if you take out a cell phone contract with networks like Vodacom, MTN, Telkom, Cell C, or Rain, the terms and repayments of this contract will be reflected in your credit record.
Other Credit Agreements: This also includes credit cards, retail store accounts, and any other credit facilities.
Creating a Credit Score
Credit Score: A credit score is a numerical representation of your creditworthiness. It is calculated based on the information in your credit record and is used by lenders to assess the risk of lending to you.
Steps to Create and Build a Credit Score:
Open a Credit Account: If you have no credit history, consider opening a small credit account, such as a store account or a credit card.
Pay on Time: Ensure that you pay your bills, loans, and cell phone contracts on time. Late payments negatively affect your credit score.
Keep Balances Low: Try not to use all of the credit available to you. Keeping balances low on credit cards and other revolving credit is good for your score.
Diversify Your Credit: Having a mix of credit types (e.g., a loan, a credit card, and a cell phone contract) can positively impact your score.
Avoid Too Many Applications: Each time you apply for credit, a "hard inquiry" is made on your credit record. Too many inquiries can lower your score.
How to Improve Your Credit Score
Check Your Credit Record Regularly: You can obtain a free credit report once a year from credit bureaus like TransUnion, Experian, or Compuscan in South Africa. Make sure your information is accurate.
Pay Off Debt: Reduce your debt as much as possible. Pay off outstanding balances and avoid taking on new debt if not necessary.
Dispute Errors: If you find incorrect information in your credit report, dispute it with the credit bureau.
Build a Positive History: Continue making on-time payments and keep credit card balances low to build a positive credit history over time.
Maintaining a good credit record and score is crucial in South Africa, as it affects your ability to secure loans, cell phone contracts, and even rental agreements.
