If owning a home is on your vision board, let this be your first set of keys to unlocking that dream. You’ve heard of a credit score, sure, but used wisely, every swipe, spend and slip can help tap open doors. Certified Financial Planner® and financial wellness coach Jean Archary shows you how.
Meet the expert: Jean Archary is a Certified Financial Planner®, financial wellness coach, award-winning author and founder of Money Messages, a financial education and wellness program to help people shift how they think, feel and behave around money.
First Things First: What Exactly Is A Credit Score?
A credit score is a snapshot of how you handle money and credit over time. Banks, retailers and other lenders use it as a quick peek into your money habits, giving them a sense of how you’ve managed credit before and how comfortable they should feel offering you more.
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What Is Considered A ‘Good’ Credit Score In South Africa?
In South Africa, credit scores typically sit somewhere between zero and 1 000, depending on which bureau is doing the scoring. The rule of thumb is pretty straightforward: the higher your score, the better shape you’re in financially. As a guide, anything over 750 is usually seen as a really strong score.
But What If I Don’t Need Credit Right Now?
The truth is, credit comes into play for most of us at some point. Even if you don’t need to borrow money right now, starting to build a credit history early can make a real difference later on, especially when it comes to qualifying for better rates and offers down the line.
5 Expert-Backed Ways To Improve Your Credit Score
The good news? Your credit score isn’t random. It’s shaped by five key factors.
1. Prioritise Your Payment History
The biggest piece of the puzzle is simple: paying your bills on time. This carries the most weight, because it shows you’re dependable and able to stick to your commitments. Payment history counts the most.
2. Watch Your Credit Utilisation Ratio (The 30% Rule)
Another big factor is how much of your available credit you’re using. Even if you have a high limit, it helps to use it lightly – ideally keeping it under about 30% – as this signals that you’re in control of your spending, not stretched.
3. Value Your Long-Term Accounts
Time also plays a role. The longer you’ve had credit, the better it looks, which is why it’s worth holding onto your oldest accounts, even if you’re not using them much. It all adds to your track record.
4. Diversify Your Credit Mix
There’s also something to be said for variety. Having a mix of credit – like a card, car finance or a home loan – can work in your favour, as it shows you can juggle different types of credit responsibly. Lenders want to see if you can manage different types of credit responsibly.
5. Space Out Your Applications
One thing to be mindful of is applying for too much credit at once, so keep applications to a minimum. Every application leaves a footprint, and a cluster in a short space of time can make lenders nervous. In other words, slow and steady really does win this race.
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Why Does Your Credit Score Matter?
Your credit score matters when you want to move forward with something new. Applying for a credit card, signing up for a cellphone contract, renting a flat or financing a car? It’s one of the first things that gets checked. It even influences your insurance premiums and the terms you’re offered.
And it doesn’t stop there. Some employers – especially in the financial sector – may look at credit history as part of the hiring process. So it’s not just about avoiding debt or staying out of trouble.
A strong credit score can help you qualify for better interest rates, more favourable terms and, in some cases, open doors professionally.
TL;DR: Credit Scores Matter When:
- Applying for credit
- Seeking employment
- Applying for a cellphone contract
- Negotiating insurance premiums and terms and conditions
- Renting a property or vehicle
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Financial Safety: How To Check Your Report For Free
It’s also worth checking in on your credit report every now and then, just to know where you stand. In South Africa, you can request one free report a year from each of the credit bureaus. To compare accuracy of the data, request a credit report from each of the leading credit bureaus in SA – XDS, TransUnion and Experian – and compare. Aim to have a look at least once a year, even if it’s just a quick check-in for peace of mind.
Why You Should Check Your Credit Report
Even if you’ve never used credit before, you should check your credit report regularly. This doesn’t hurt your score. Here are three ways checking your credit report can empower you:
- It helps to identify potential fraud, otherwise you may not be aware of accounts being opened in your name. Pro tip: Splendi offers free credit monitoring so you get alerted when a new account is opened.
- Women are susceptible to financial abuse, so keeping an eye on your credit report helps you monitor credit transactions and see if accounts are actually being paid.
- A credit report is a useful tool that enables you to have an exact picture of how much debt is owed.
