Patricia Louw
Factors that influence credit score
Your credit score, a numerical representation of your creditworthiness, is derived from the information in your credit bureau report. Several factors contribute to your credit score: Payment history: Timely payments on credit accounts significantly increase your score.
Credit utilisation:
This is how well you keep within your facility limits prescribed by the credit provider. Do not exceed the limits provided, and keep the ratio between what you owe and the limit provided low.
Length of credit history:
The longer your credit history or the more credit you have, the more favourably it is viewed by lenders.
Types of credit in use:
A healthy mix of credit types, such as credit cards, mortgages and instalment loans positively impacts your score.
New credit:
Refrain from opening multiple new credit accounts in a short period, as this may adversely affect your score.
Improving your credit score
If your credit score is not where you want it to be, you can take proactive steps to enhance it. Remember, a good credit score will enable you to get financial assistance at a time when you most need it. Below are some ways to improve your score:
Pay bills on time:
Consistently making ontime payments is the most effective way to improve your credit score. Where possible, load debit orders to ensure all obligations are paid on time with minimal effort.
Reduce credit card balances or overdraft limits:
Lowering credit card balances or overdraft limits can positively impact your credit utilisation ratio.
Check for errors:
Regularly review your credit report for inaccuracies and dispute any discrepancies.
Avoid opening unnecessary accounts:
Opening too many new accounts within a short timeframe can be perceived negatively.
Diversify your credit mix:
A diverse mix of credit types, responsibly managed, can positively impact your credit score. *Patricia Louw is the finance credit manager at Old Mutual Namibia.