All credit-active South African consumers have a credit profile. This basically provides a history of all your dealings with every credit provider you’ve used.
A credit report is the information provided by a credit bureau, obtained from your credit profile. Your credit score is derived by assessing your credit activity.
Your credit rating is used by credit providers to decide on whether to grant you credit or not. This rating gives them an indication of how well you’ve been managing your credit and how likely you are to default on payments.
Your credit rating essentially depends on how much credit you have and how well you’ve been paying it off. The general rule of thumb is: the higher the score, the better your credit rating. There are ways to improve your credit rating.
How to improve your credit rating in South Africa:
Make sure you pay your account in full and on time every month. Remember that default listings and judgements have a negative impact on your score. If you make payments diligently, this reflects positively on your credit behaviour and credit providers may be willing to extend credit if you pay on time.
Use credit cards prudently. If you have a credit card, one of the best ways to improve your credit rating is by making sure that you avoid maxing out your credit card. Don’t use your credit card if you know that you can’t afford to repay it.
Keep low balances on your credit cards. By keeping low balances on your credit cards you will show that you aren’t likely to overspend and go over your credit card limit.
Make sure that you pay your debt off, rather than just moving it around. Pay your debts off on time every month.
Refrain from applying for credit needlessly. Make sure that you apply for credit when you really need it and when you can afford repayments.