How to maintain and improve your credit score

By Isabelle Coetzee

Everyone starts out with a credit score of zero, which – contrary to popular belief – may dissuade credit providers from offering you credit.

The advice is typically that you need to prove your creditworthiness by opening a small credit-bearing account, such as a store account or a credit card account, and diligently making the appropriate payments.

Once you’ve established a fair credit score, you’ll have access to larger products and services, such as a home or a car, because credit providers will have evidence that you can effectively manage your accounts.

But your credit score is ever-changing and if you mismanage any of your accounts, your credit score will reflect these discretions. How can you ensure your credit score is both maintained and continues to grow?

The following tips could help you stay on track:

1. Keep your credit balance around 30%

Imagine you have two credit-bearing accounts: a store account with a limit of R5,000 and a credit card account with a limit of R10,000. This means that your combined credit limit is R15,000.

According to experts, you should never utilise more than a third of your combined credit limit. Based on the above example, you should then only buy R5,000 of goods and services on credit.

Making use of your full credit limit can be risky and it often makes credit providers nervous. By sticking to a third of your limit, you’re showing that you’re a low-risk consumer.

2. Pay your accounts on time, and in excess

As soon as you receive your salary, it’s important to pay the monthly instalments on your accounts. This will show your credit providers that you can prioritise your financial obligations.

As a result, your credit score will flourish. Although not all credit providers will report your diligence to the credit bureaus, they will certainly inform them if you fail to pay your accounts on time.

In addition to paying your accounts on time, it could also build your credit score to pay slightly more than you need to.

For example, if your instalment is R200, you could pay R250 instead. This will both help you settle your debt sooner, as well as show your credit providers that you’re willing to go the extra mile.

3. Don’t open too many accounts

Every time you open a new account, the respective credit provider will make a soft enquiry to your credit report to see whether you qualify. Although this is harmless, having numerous credit providers enquiring about your credit score can have a negative impact on it.

Therefore, it’s best to only open a new account if it’s necessary and to avoid opening more than one account at a time.

The best way to stay on top of your credit score is to know where you stand. You’re allowed one free credit report from each of the credit bureaus each year, or you can get a free credit report through Justmoney .

By following these tips, you will be able to maintain and continue to grow your credit score, enabling you to be approved for the credit you truly need one day.

READ MORE: The ultimate guide to understanding your credit score 

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