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Boost your credit score

By Staff Writer
Nicolette Dirk, finance writer, Justmoney.co.za
 
The first quarter of 2014 has hit consumers’ pockets hard with the inflation rate reaching the 5.9% mark after a third consecutive increase in February 2014.
 
At the end of January this year the repo rate was increased by 0.5% and although it was not increased last week, the general sentiment by experts indicates that there may be more increases to the repo rate follow this year.
 
Efficient Group economist, Dawie Roodt said consumers should realise that the world is experiencing an interest rate tightening circle. This means that interest rates could be going up twice this year.
 
“The low interest rates we have been experiencing these few years are a thing of the past,” said Roodt.
 
Consumers will also likely have to brace themselves for another petrol price hike tomorrow.
 
Johan Maree, CEO of FNB Credit Card, said consumers are coming to grips with the impact that these ongoing increases are having on their budgets.
 
“For some, meeting  everyday living costs while making minimum payments required to service their debt will become increasingly hard,” said Maree.
 
Although the 0.5% increase in repo rate only results in approximately R12 more per month on a credit card balance of R30 000, it is when all your debt is tallied up that it can become hard to  ensure timely and full repayments.  
 
According to Maree, consumers can, despite the increase in rates, manage their debt and improve their credit score. 
 
Here are some tips to increase your credit score:
 
Know your status
 
Check your credit records at all credit bureaus. South Africans are entitled to one free report per year after which additional reports can be attained at a small fee. 
 
“It is important to check the information that the various credit bureaus have on record of you to ensure they are up to date and accurate before applying for large loans or additional credit,” said Maree.
 
Get rid of accounts you no longer use
 
Reassess your monthly spend and reduce your credit limits accordingly. If you notice that you are spending on items which you can cut down on, do so and close any retail accounts you no longer make use of. 
 
“Keep in mind that the credit card rating of someone whose debt to credit ratio is 75% or below, will be more favourable than on a card on which the maximum limit is reached monthly,” said Maree.
 
Stability and a higher score go hand in hand
 
A credit provider will consider how long you have worked at you current job and how often you move residences as part of the credit rating process. It is used as an indication of your stability, trustworthiness and risk profile in the event that debt has to be collected from you. 
 
Keep bills in your name
 
If you have paid your debt off in a timely fashion over a number of years, chances are you can work towards a credit rating that could afford you a more favourable interest rate. It is therefore crucial to ensure that all your bills and debt that you are repaying is in your name so that you can benefit from a positive credit rating. Note that repaying someone in a personal capacity will in no way contribute to your credit record.
 
Pay more than the monthly minimum
 
When you receive your credit card statement, a monthly minimum and due date are indicated. If you regularly only pay the minimum and make little impression on the total owed, your card company may see this as a sign of distress and may reduce your access to future credit.
 
“In order to work towards a favourable credit score, the least you have to do is to always meet your monthly minimum payments. If you need assistance in getting on track with your finances or if you find it difficult to meet your payments, contact your bank to discuss possible debt relief options. Your bank is there to assist and will be happy to put a solution in place,” said Maree.

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