Keeping a healthy credit score
The number of applications for credit increased 5.15% to 9.87 million in September 2017, according to the latest consumer credit market report by the national credit regulator. The rejection rate was 51.39%, which may be due to impaired credit records.
Improving your credit score means looking after your Empirica 5 credit score from TransUnion. When you apply for a loan or credit, lenders use the score to decide how much credit to make available to you, and on which terms. How your credit score works Your credit score has five categories of information: payment history (40%), amount owed (33%), length of credit history (15%), new credit (7%) and credit mix (5%). You’re not locked into a score forever. There are no quick fixes, but paying your bills on time and only applying for new credit when you really need it can go a long way to moving you from a negative credit status to a positive one. 1. The best way to improve your score is to
make payments on time. 2. Only take on credit you really need. Having a lot of debt can reduce your score. Your score considers the total you owe, how many accounts you owe on, and how much of your credit you’re using. If you’ve applied for credit but haven’t used it, this will count against you, because your affordability calculation is based on the worst-case scenario, assuming you’ve used up the credit line. 3. Be careful of applying for many accounts
at once. The score looks at how many accounts you’ve opened or applied for recently. If you’ve opened several new credit accounts in a short period, you’re seen as a greater credit risk. The score won’t penalise you for shopping for the best rate (best to do this within a 30-day period). Is an objective measure of your credit risk that allows lenders to speed up credit and loan approvals. Provides a balanced look at your entire credit history. Doesn’t consider your gender, race, religion, nationality or marital status. Doesn’t look at your income. People with lower incomes can be better credit risks than those with high incomes. Takes into account your recent payment patterns. Derick Cluley is FICO’s head of operations in Africa.