Credit rating is an assessment of a person’s creditworthiness which allows a lender to determines whether you, as a borrower, will default on credit obligations, or how worthy you are to receive fresh credit.
This information is critical when people are seeking loans when they want to purchase a car or property.
People have the right to a free credit report every 12 months from any credit bureau in South Africa as mandated by the National Credit Regulator and the National Credit Act (NCA).
How can I keep my credit rating up and my record clean?
If you are worried about maintaining a good credit rating and credit report, then there are steps you can take to ensure that you never end up in the red.
1. Don’t apply for credit too often.
If you are applying for credit or loans frequently, it is an indication that you have financial challenges and the more often you apply for credit over 12 months, the more your name is listed.
2. Manage your credit card.
If the balance on your credit card is kept well below your borrowing limit (preferably 35%), your score will benefit.
3. Avoid high balances on credit accounts.
Having a high balance on revolving credit accounts can lead to a high credit use rate that can hurt your score. Keep a low balance in relation to the available credit ratings to maintain that good credit score.
4. Pay up on overdue accounts.
While a late payment can remain on a person’s credit report for years, getting all the accounts paid up to date can help benefit a person’s credit score.
According to Manyike, even when things do go wrong, a clear credit rating is not unreachable.
“Pay your dues, clear your name, and you can then apply for a clearance certificate. It can be a lengthy process to clear your name, but your financial future will benefit from it.”
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