Ayanda Ndimande, a strategic business development for retail credit at Sanlam advises that better credit scores open doors to more opportunities for responsible credit use.
As many consumers rely on credit to improve their lives, this also can be a challenge to many people who spend recklessly and as such, this could have a negative impact on their credit score.
“Smart credit habits can save you a significant sum of money over time and support your financial health. We all need healthy habits to build a solid foundation for our financial futures,” advises Ndimande.
Responsible credit a foundation to build on
Ndimande pointed out that consumers should understand their credit report, as that would be the foundation of their credit score and can influence our ability to secure loans, mortgages, and even rental agreements.
By law, South Africans are entitled to one free credit report each year, where they can take time to review it thoroughly and look out for inaccuracies.
Ndimande said that if consumers find any discrepancies in their credit reports, they should immediately dispute them as this will help them to understand the specifics of their credit report, in which they will be empowered to address issues that could negatively impact their credit score.
Understand how it all works
“A score above 600 is generally considered good, but knowing where you stand is just the
beginning. Familiarise yourself with how your score is calculated – payment history, credit
utilisation, length of credit history, types of credit used and new credit inquiries.
“There’s a solid formula for your score, which means there’s a ‘formula’ to improve it as well. If you can practice good financial habits like paying your debt on time, diversifying your mix of credit – showing that you can pay different kinds of debt on time – and not maxing out your credit limit each month, you can immediately start to make strides on improving your score.
The longer you can build up a good credit history, the better,” said Ndimande.
