Credit scoring and how it works?
In short, your credit score is based on your financial behaviour towards your creditors and these include things such as:
1. Have you paid your creditors back in time and in full? Balance owing on all your credit accounts, what type of accounts and how they have been handled are taken into account when scoring.
2. For how many years have you been a borrower? If you have a longer credit history it tends to positively impact on your score.
3. How much of your available income is allocated to paying your debt to creditors?
4. Retail stores and banks’ default listings will remain on a credit profile for two years and any judgment against someone will remain on their profile for five years.
5. A score of 660 or higher is considered to be a very good score.
6. Consumers with credit scores in this bracket have a higher chance of gaining finance.
7. Consumers with scores below 620 will find it more difficult to get credit as they will be regarded as “high risk”.
Tips on getting a clean record:
1. Paying credit accounts on the due date will increase your credit scoring.This includes accounts such as credit cards, retail accounts, and instalments on loan accounts such as vehicle finance, personal loans and bond repayments.
2. Should you owe money on any account it won’t necessarily lower your credit score, however, some financial institutions might feel uneasy to grant additional credit to someone they feel is overextended.
3. In some cases it is better to have a small balance on an account than no balance, as long as the account is managed responsibly.
4. Avoid being close to maxing out your credit card’s limit.
5. Opening many new accounts in a short time will negatively impact your credit score and be seen as a high risk.
6. Re-establishing credit on old mismanaged accounts and making payments timeously again will raise your score over a certain period of time.
7. Late payments will reflect negatively on credit rating.
8. Do not ignore a legal letter from a creditor - act on it immediately.
Read full article
Credit scoring and how it works?
In short, your credit score is based on your financial behaviour towards your creditors and these include things such as:
1. Have you paid your creditors back in time and in full? Balance owing on all your credit accounts, what type of accounts and how they have been handled are taken into account when scoring.
2. For how many years have you been a borrower? If you have a longer credit history it tends to positively impact on your score.
3. How much of your available income is allocated to paying your debt to creditors?
4. Retail stores and banks’ default listings will remain on a credit profile for two years and any judgment against someone will remain on their profile for five years.
5. A score of 660 or higher is considered to be a very good score.
6. Consumers with credit scores in this bracket have a higher chance of gaining finance.
7. Consumers with scores below 620 will find it more difficult to get credit as they will be regarded as “high risk”.
Tips on getting a clean record:
1. Paying credit accounts on the due date will increase your credit scoring.This includes accounts such as credit cards, retail accounts, and instalments on loan accounts such as vehicle finance, personal loans and bond repayments.
2. Should you owe money on any account it won’t necessarily lower your credit score, however, some financial institutions might feel uneasy to grant additional credit to someone they feel is overextended.
3. In some cases it is better to have a small balance on an account than no balance, as long as the account is managed responsibly.
4. Avoid being close to maxing out your credit card’s limit.
5. Opening many new accounts in a short time will negatively impact your credit score and be seen as a high risk.
6. Re-establishing credit on old mismanaged accounts and making payments timeously again will raise your score over a certain period of time.
7. Late payments will reflect negatively on credit rating.
8. Do not ignore a legal letter from a creditor - act on it immediately.
Read full article