What your credit score means

In ????South Africa, your credit score is a numerical representation of your creditworthiness. Lenders use it to assess the risk of lending you money or extending credit. Credit scores typically range from 440 to 760+ (depending on which credit bureau you're using), with higher scores indicating better creditworthiness. Here's a general breakdown of how credit scores are often interpreted:

• 440 - 679 Poor - Individuals in this range may have difficulty obtaining credit and are considered high-risk borrowers.
• 680 - 759 Good - This range suggests responsible credit management and increases your chances of getting approved for credit at better terms.
• 760+ Excellent - With an excellent credit score, you will likely qualify for the best credit offers and lowest interest rates.

What influences your credit score?

Several factors influence your credit score, which is a numerical representation of your creditworthiness. These factors help lenders assess the risk of lending you money or extending credit. Here are some key factors that influence your credit score in South Africa:

1. Payment History: This is one of the most important factors. Lenders want to see if you've consistently made your credit payments on time. Late payments, defaults, and bankruptcies can negatively impact your score.
2. Credit Utilization: This refers to the percentage of your available credit that you're currently using. Using a large portion of your available credit can signal financial strain and lower your score.
3. Length of Credit History: The length of time you've held credit accounts matters. A longer credit history demonstrates your ability to manage credit over time.
4. Types of Credit: Having a mix of different types of credit, such as credit cards, instalment loans, and mortgages, can have a positive impact on your score, as it shows your ability to manage different forms of credit.
5. Recent Credit Inquiries: A credit inquiry is made whenever you apply for new credit. Multiple recent inquiries can indicate financial stress and might lower your score.
6. Public Records: Negative public records like bankruptcies, judgments, or legal actions can significantly negatively impact your credit score.
7. Credit Account Activity: Regular activity on your credit accounts, such as making timely payments and using credit responsibly, can positively influence your credit score.
8. Credit Reporting Errors: It's important to check your credit report for errors regularly. Mistakes in your report could unfairly lower your score.
9. Credit Management: How well you manage your credit obligations, pay off debts, and maintain a good credit history overall plays a role in determining your credit score.

Remember, the exact weight of each factor may vary depending on the credit scoring model used by credit bureaus in South Africa. Reviewing your credit report regularly is a good idea, as understanding the factors affecting your score and taking steps to improve or maintain a good credit profile.

You can get your full credit report for free with Debtline - a leading Debt Review Specialist.