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Deciphering your credit score

Credit • by Paul de Beyer • 15 April 2019
There really is a number for everything. You can’t WhatsApp without a cellphone number or vote without your ID number. Even the easiest number to remember – your age – controls when you can get a driver’s licence or buy a drink.

But then there’s this other number. A number that can have a massive bearing on whether or not you qualify for that cellphone contract or home loan. It can even have an impact on that job you might want to apply for. That number is your credit score.

1 What on earth is my credit score?

Your credit score is the number that credit bureaux assign you when they take your past financial history – specifically how you’ve handled your debt – into account. When you turn 18, your score is zero as you have no credit history. Over time you may buy things on credit such as a pair of shoes on a store account or the latest iPhone with your credit card.

As you pay off your debt, the way you do so is recorded in your credit report. If you miss a payment, it has a negative effect on your credit score. If you make your monthly payments on time, your score goes up. Over time, these various interactions are analysed and then calculated into a score – your credit score.

2 What’s a good number?

There are currently four credit bureaux operating in South Africa. Each one has a slightly different scoring system but a general breakdown of credit score ranges are:

  • 650 and over – a brilliant score
  • 550-650 – a good score
  • 490-550 – less desirable, but still OK
  • Below 490 – regarded as a poor score, and could have a negative effect on your ability to apply for credit like loans.

Your score is an ongoing tally, meaning that it changes as you interact with debt. Some interactions have long-term consequences which can take years to recover from. It can also be affected by simple credit history enquiries. These enquiries fall into two categories: soft and hard enquiries.

A soft enquiry is someone simply viewing your credit report, like a future employer doing a check on you.

A hard enquiry is when a bank or lending company does an analysis of your credit history to see if you qualify for a personal or home loan. You should try to keep these types of enquiries to as few as possible per year as they are recorded and kept on your credit report for up to two years.

3 How do I know what my credit score is?

Luckily for you, you’re a Creditgenie client. Creditgenie clients have access to a bunch of really great tools, including four free credit reports per year (get yours now). These are soft enquiries, so you don’t have to worry about them having any influence on your score!

The best part is that we not only give you your credit report, but also break it down in an easy-to-understand format so that you won’t be left guessing what each section of the report means.

If you’re disappointed with your score, we’re here to help you.

As a Creditgenie member you have full access to our Financial Wellness Programme, which includes telephonic financial counselling, debt management and, if necessary, a formal debt review with an NCR accredited debt counsellor to help set you on the path to improving your credit score over time.

Checking your credit score should be a thing of habit, although very few of us actually do so. The quickest and simplest thing you can do to ensure that your credit score improves is to check it a few times per year, ensuring that there are no errors on the report. Errors may occur and can have a devastating effect on your overall score.

Log in to your Creditgenie account today and download your comprehensive credit report.