Ten million South Africans have bad debt due to three or more missed monthly payments. Add the impact of COVID-19 and there’s never been a more important time to take back control of your finances. One of the best ways to do this is to understand your credit score, says Ayanda Ndimande, Business Development Manager: Retail Credit at Sanlam.
What is a credit score?
If you have debt, you’ll most likely have a credit score. This is the measure that tells prospective future financiers how much of a ‘risk’ you are in terms of your past debt repayment behaviour. The credit score system considers your transactional records and gives you a score that ranks you as low, medium or high risk. Your score takes your total debt and debt repayment history into account. This means it reflects any late or outstanding amounts owed, the frequency and type of credit you’ve applied for, previous judgements against you, and how much of your available credit you currently use.
Why should you care about your score?
If your credit score registers you as ‘high risk’, your chances of accessing future credit may be greatly reduced. You may also be charged a higher interest rate on credit agreements that you qualify for. A poor credit score may even jeopardise your future job prospects, as some employers view your credit score as part of a background check.
How do I check my score?
Every South African is entitled to a free credit report that shows you how much interest you’re paying on various credit agreements and which allows you to compare your rating against the average score of credit-active South Africans.
Sanlam also provides a free tool to help you understand your credit profile and to ensure that you are aware of your credit standing, to enable you to make the best financial choices.
Visit Sanlam Credit Solutions to register for your credit profile. You will receive free access to a personal coach who will assist you in taking the necessary steps to improve your credit score and help to put you on a stable footing again.