Your credit score can be influenced by several key factors including the following:
- Payment History: Making timely credit account payments is crucial. Late or missed payments will lower your score. Always try and pay at least the minimum amount on your credit account each month.
- High Account Balances: High debt balances (35% and up of your available credit limit) can negatively affect your score.
- Credit Inquiries & Too Many Accounts: Multiple recent credit inquiries or opening several credit accounts within a short period of time can indicate financial stress (high risk enquiries seen as risky behaviour) and may lower your score.
- Public Record Information: Negative items like judgments or defaults indicate that you did not honour certain/specific debt obligations and can have a significant impact on your score.
- Accounts in Good Standing: Having accounts with a good payment history contributes positively to your score.
- Debt Levels: Having too much credit available can harm your credit score as providers may feel you spend more than what your income allows or what you can pay back. Be mindful when it comes to your credit accounts and credit limits.
- Debt/Credit Counselling: Debt/Credit Counselling also known as No-loan Debt Consolidation or Debt Review is a responsible choice when you receive an income and are severely overindebted (can’t cover what you owe with what you earn). While under the process (that is regulated by the National Credit Regulator), however, as part of the legal and rehabilitation nature of the programme, you won’t be able to apply for additional credit/debt. You will have a temporary flag next to your name and as soon as you have repaid your debt (with a home loan exception) your flag will be removed by the registered credit bureaus in South Africa.
Understand and take note of the above factors and manage your credit profile wisely as this can help you maintain or improve your credit score/rating.
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