Numerous SouthAfricans often require credit facilities to fund various expenses, liabilities, and property acquisitions.
Your classification as a low, medium or high-risk borrower is dependent on numerous factors.
A credit score is often a misunderstood term.
A Mastercard credit card. Photo: pexels.com, @pixabaySource: UGC
Everything to know about a credit score in South Africa?
A credit score is primarily based on a debt report, information that is typically sourced from credit bureaus.
What is a good credit score in South Africa in 2022?
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Basically, a high score indicates a low-risk borrower, while a low one points to a high-risk borrower.
Here is a look at the Delphi scoring system used by some credit bureaus, such as Experian.
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This is often due to the difference in the scoring methods, information sourcing, and time of assessment.
How is a credit score determined?
Numerous factors related to a person’s debt behaviour determine a person’s credit score.
A person using their credit card online. Photo: pexels.com, @Kindel MediaSource: UGC
This is arguably the most important determinant of a person’s credit rating.
A single missed payment can have a significant impact on your rating.
For most bureaus, payment history typically accounts for about 35% of your score calculation.
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This is also known as a person’s debt utilization ratio.
This aspect of the rating accounts for about 30%.
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This is how long you have held debt accounts.
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This duration accounts for about 15% of the score.
The longer your history, the better your ratings.
Usually, individuals with top ratings often have a diverse portfolio of credit accounts.
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These might include car loans,credit card debts, student loans, mortgages, or other debts.
This aspect accounts for 10% of your rating.
Too many inquiries about new debt can hurt your score.
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This element accounts for 10% of your score.
Do I need a credit score?
A person’s credit score is calculated based on their debt record.
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This essentially means that if you have no credit record, you probably do not have a score.
On the face of it, this may sound like a good thing.
However, it is not all positive.
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This makes it important to have a credit rating.
Luckily, there arenumerous simple stepsone can take to improve their rating.
Here is a quick look.
Theminimum credit scorefor a home loan in South Africa is around 640.
How can I get a free credit score check in South Africa?
One can access your personal credit reports through theMy Credit Checkportal.
The portal references data from the Experian Sigma database.
Subsequent checks attract a small fee.
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What is the average credit score in South Africa?
The average credit score in South Africa is between 583 and 613.
Figuring out your credit score in South Africa is quite important and remarkably easy in the modern day.
Besides the one free credit check per year, individuals can also get subsequent checks for a small fee.
This rating is essential since it’s the primary determinant of one’s creditworthiness.
DISCLAIMER:This article is intended for general informational purposes only and does not address individual circumstances.
Any action you take upon the information presented in this article is strictly at your own risk and responsibility!
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He graduated with a degree in Mass Communication from The Polytechnic, Ibadan, Nigeria.
He has curated the facts and life hacks category since 2018.
Dr Favour is the author of several books available on Amazon.
He currently lives in Nigeria.
She tackles diverse topics, including finance, entertainment, sports, and lifestyle.
Previously, she worked at The Campanile by Kenyatta University.
She has more than five years in writing.
In 2023, Jackline finished the AFP course on Digital Investigation Techniques and Google News Initiative course in 2024.
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