Get your credit health report from Bayport and follow these steps to improve your credit score.
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Bayport Blog

How to improve your credit score

Published: January 7, 2021
Categories: Financial wellness
Tags: Credit Health, Credit Score/Rating, Credit Wellness, Financial Health, Financial Literacy, Financial Tips
improve your credit score and credit health

2020 has been hard on our budgets and our pockets, and in many cases on our credit scores as well. Let us look at what we can do to nurse those scores back to health.

Before you can start improving your credit score, you have to know what it currently is. This is very easy to do. Every South African consumer is entitled to one free credit report per year. Bayport can help you get your report: simply click here to set the ball rolling.

Your credit report will tell you all you need to know about your credit health situation at the moment.

What does a credit report show?

  • All the credit you have applied for over the past two years.
  • All the debt (accounts or loans) you currently have, and your payment history with them (including any late or skipped payments).
  • Any court judgments or defaults there may be against you.
  • Your credit score.

Where does the information come from?

There are four main credit bureaus in South Africa: Experian, TransUnion, Compuscan, and XDS. Every month, credit providers – banks, cellphone companies, retail stores, property rental agencies, and so on – send transaction details to these bureaus. They then compile the information into a credit report that shows each consumer’s credit history and habits.

What is a good credit score?

Most credit bureaus rate your credit score between 300 and 850:

  • A low score is between 300 and 579.
  • A fair score is between 580 and 669.
  • A good score is anything above 700.

Each credit bureau uses its own formulas and methodologies, so your score will not be the same at all four.

A high credit score shows that you are good at managing your debt, which means you are likely to repay a new loan or honour an agreement such as a rental contract.

Why is a good credit score important?

When you apply for credit, the potential credit provider will pull a credit report from one of the four credit bureaus. If you have a healthy credit score, you stand a good chance of not only getting the loan but getting it at a lower interest rate than someone whose credit score is only fair.

Remember, however, that credit providers also look at other factors, such as your debt to income ratio. If that number is too high, in other words, if too much of your income goes towards repaying debts, the credit provider will see you as a risk.

Can I improve my credit score?

Absolutely! The credit report you get today is only a snapshot of your recent financial behaviour. This means that when you change what you do, your credit report will look different too.

How can I improve my credit score?

The short answer is that healthy money habits will improve your credit score. Here is what it means in practice:

  • Work with your personal budget to help you manage your money better.
  • Check all the accounts on your credit report. Make a note of the ones you have not been paying according to your agreement, eg, missing payments or paying late. Put a reminder on your phone to make sure you pay the full amount, on time, every month.
  • Never use more than 35% of the credit limit on an account or a credit card. For example, if your credit card limit is R5 000, never owe more than R1 750 per month. Similarly, when you take out a loan, do your best to not take the maximum amount for which you qualify.
  • Actively look for debt solutions, such as consolidating your current loans or negotiating payment arrangements with your credit providers, if you are struggling to make ends meet.
  • Close any credit accounts that you’re not using, such as store cards from a shop you no longer buy from regularly, or old credit cards.
  • Maintain a healthy mix of credit, such as retail accounts, credit cards, a home loan, and service contracts such as for a cell phone. This helps to establish a strong credit history.
  • Do not shop around for multiple lines of credit at the same time. Every time you apply for a loan, the credit provider runs a check at the credit bureau. Too many applications at the same time could indicate that there has been a significant change in your financial situation.
  • Check your credit report and your credit score regularly so that you can dispute any mistakes or information that you don’t agree with.

Now is the best time to start rebuilding your credit score after the difficult year we’ve had. You can do it, all it takes is time, discipline, and healthy financial habits.

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