We all know that credit reports are key to accessing credit, but very few people actually understand what components make up a good credit score, and how the credit report is compiled. This list is by no means exhaustive but it should give you a fuller picture of the behaviors that credit bureau collect to end up with your credit score. Your credit score and report is your personal credit management CV so you need to make sure you keep a close eye on it.
- Having an impeccable credit score does not automatically mean you will have access to credit: Your credit score is a small part of what lenders look at when considering whether to grant you credit. It’s always a good idea to keep your score healthy but don’t assume that a healthy score is an automatic ‘yes;’ from creditors.
- You attempt to open too many accounts: Every time you try and get credit is recorded in your report. If you’re constantly hopping from creditor to creditor, applying for credit, this is reflected in your score and counts against you.
- Missing payments has a negative impact on your credit score: When you miss payments, your credit score takes a knock. This won’t look good should you need credit to be extended to you later on.
- High account balances also affect your credit score: So you’re not missing payments, but you have many accounts, and you’re paying the very minimum – just enough to keep you out of hot water. This doesn’t help your score at all. Having lots of debt that you’re on ly barely managing means you struggle with debt management and you’re one monthly payment away from a disaster.
- You are entitled to one free credit report a year: You can check what your credit score is online. We recommend using Experian or TransUnion.
- Your credit score can be used to alert you to identity theft cases: You can use your credit score to keep tabs on any illegal activity that could be happening using your name. Check your score at least twice a year to be on the safe side.
- You can lodge disputes with the credit bureau: You noticed an entry in your credit score that you don’t recognise? You can lodge a complaint with the credit bureau that you received your report from. You can also contact the credit Ombud’s office. The number is 0861 662 837, email: firstname.lastname@example.org or visit www.creditombud.org.za
How do I know if my credit score is good?
TransUnion’s credit score indicator is:
- Poor: 0 to 615
- Fair: 616 to 729
- Good: 730 to 821
- Very Good: 822 to 917
- Excellent: 918 to 999