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Need to save money? Your credit score can help!

Debt Management • by Paul de Beyer • 18 July 2019
Saving money is a good idea and we’d all love to save a few extra rands every month, even if it’s just to make sure that the months don’t feel so long. According to data released by Old Mutual in June 2018, the levels of saving among working South Africans were as low as 15%.

This comes as little surprise, especially with rising food costs, a petrol price that continues to soar and the rand battling to make any headway against foreign currencies. Saving anything at all just feels impossible right now. Or is it?

Most of us aren’t entirely in control of our finances, especially when it comes to understanding where it all goes each month. We know we should draw up a budget, but it's one of those chores that just never seems to get done – like tidying the garage or clearing out the very top cupboard shelf.

Well, what if you could save some extra money every month without doing any budgeting? Impossible, right? Wrong.

Simply score some extra cash by checking your credit score. But how do you save by checking something like your credit score? Well, your credit score is more than just a number. It is THE number financial institutions and lenders look at when deciding whether or not you’re capable of handling your money and, more importantly, credit responsibly.

A very low score will likely lead you to be declined any form of credit, but a low to average score could cost you a lot of money. As your credit score is directly linked to how lenders view you, a higher credit score makes you far more attractive to them. The more attractive you are, the more lenders are inclined to give you – and at a lower interest rate.

The interest rate is the number that determines how much you pay back on your loan. Your credit score could get you a lower interest rate which means that you pay less for the amount of money you’re borrowing.

So how does this work in the real world? The higher your credit score, the better the rate you will get when financing a car purchase. The same would apply for a personal or home loan where a higher credit score can go a long way in advancing your affordability rating.

For example, if you got a home loan of R1 000 000 at a 10% interest rate for 20 years instead of 10.5%, that would save you R500 a month. If you took just that R500 each month and put it into an investment with an annual return of 10%, you could end up with around R360 000 (Allan Gray investment calculator https://www.allangray.co.za/investment-value-calculator) after 20 years.

Not only would you save on your monthly bond payments, but you would be creating wealth for yourself, turning your R120 000 in savings over 20 years and tripling it.

Knowing, understanding and working to improve your credit score could be the easiest way to save. The best part is that with Creditgenie you get access to four credit reports each year, meaning that you can not only check your score at the start of the year, but gauge your progress as the year goes on.

If you’re wondering how to go about improving your credit score, simply take advantage of the Creditgenie Financial Well-being Programme and accredited, qualified, financial expert which come as part of your Creditgenie membership.

Check your credit score today and start saving for your future.