The ABCs of clearing your credit record

This is the fourth and final blog in our four-part series on clearing your credit record in South Africa. If you’ve been keeping an eye on the blog over the last few weeks, you are now all caught up on the role your credit record plays in determining whether you are a sound investment for financial institutions who extend credit to SA consumers. We’ve discussed the role of credit bureaux in determining your overall credit score, how a credit record differs from a credit report, and what a good credit report should look like.

What causes a low credit score?

If you have any of the following against your name, it could result in a low credit score: Accounts in arrears. If you have been late paying certain accounts, this reflects negatively on your ability to stick to payment terms.
Default accounts. These are accounts that have been handed over to collection attorneys after an extended period of being in arrears. Skipped payments. Paying on time one month, and then skipping the next also affects your credit score badly – it is seen as erratic payment behaviour. Judgments. If you have judgements against your name pertaining to default accounts, your credit score is likely to be affected negatively. Administration. If you have been placed under estate administration to manage your finances, this will result in a lower credit score. Debt review. If you currently are under debt review, it will reflect negatively on your credit score. Credit providers are not meant to extend any credit to individuals who are in the process of clearing their debt, so debt review is flagged as an issue.

However, once your debt is paid off in accordance with the agreement the debt review agency put in place with your creditors, your credit score will be improved.

What can I do improve my South African credit score?

The first step to improving your credit score is knowing your credit score. Then, there are a few straight-forward, although by no means simple, steps you can take:

Pay the entire instalment amount on outstanding accounts every month. Keep your use of your existing credit facilities under 35% of the limit (e.g. if you have R1000 credit, never go over R350). Take steps to remove publicly available negative information, such as judgements and administration orders, from your report by paying off all your outstanding debt. Establish a strong credit history by maintaining moderate use of credit such as store accounts, loans, etc. and paying it off in a dependable fashion. Don't sign up for too many sources of credit at any given time - it reflects badly on your financial situation even if nothing is wrong. Check your credit score regularly to see if everything looks right. If it doesn't, contact the credit bureau to dispute any inaccuracies.

This concludes our four-part article on the ABCs of clearing your credit record in South Africa. Keep an eye on the blog in coming weeks and months for more helpful advice on debt management.

In the meantime, feel free to contact a Libertine Consultants representative directly if you have any questions about our credit services. We're happy to assist you with drawing your credit record, analysing it and providing step-by-step support to improve your South African credit score.