No Credit vs Bad Credit

Going through life debt-free as far as possible might seem ideal but it’s not always possible. Using cash to steer clear from debt might be the best way to go when you want to keep your head above water, but what are the implications of not building up a credit score?


Choosing to life a strictly cash life means you aren’t building up a credit score and can see you having limited access to certain financial services. A good credit score will make it a lot easier to qualify for a home loan or get vehicle finance. Not having a credit score at all will force you to buy a vehicle or house cash – a feat that seems quite impossible to the average South African household. Your score even plays a role when you lease a property. As per the NCA, landlords or rental agencies need to conduct a credit check on the applicant before they can enter a lease agreement.

Building a good credit score takes time and requires discipline. The first step you need to take in building a good credit score is to know the status of your credit score. You can get a credit report at all credit bureaus. Various contributing factors like how long you have been working at your current job, how often you move residences and if you pay your bills in a timely manner will influence your credit score. You can improve your credit score by paying bills on time and even by trying to make additional payments on top of the minimum required payment. Make sure that these bills and accounts are registered in your name – if you pay bills in a timely fashion or make additional payments on your accounts but they are not registered in your personal name, you are working against yourself and wandering off your good credit score journey.

A bad credit score will also see you struggling through life. As mentioned earlier, there are certain things that will require you to enter a credit agreement at a certain point in your life. Financial institutions will simply decline your application, whether for a vehicle financing, a home loan or a personal loan, if you have no credit score or bad credit score.

Credit should never be used for non-essential purchases. Credit doesn’t always have to be the bad guy, as it is usually made out to be. When used correctly and responsibly, credit can improve your life and the life of your family. Good debt can range from anything like a home loan or even a personal loan – how you apply that personal loan however will determine if it’s good debt or bad debt. A bad score is much worse than having no score, but both of these will see you living a financially limited life. Instead of having no credit score at all, try to build a good credit score at a steady and responsible pace. Bayport offers all our customers a free, monthly credit health report. The credit health report gives you an easy and simple view of your credit changes whether its positive or negative, allowing you to be proactive and manage your credit profile responsibly.
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