Understanding and building Credit Score In South Africa
1.
What Affects Your Credit Score?
Payment history – paying bills and loans on time improves your score.
Debt levels – owing too much compared to your income lowers your score.
Credit mix – having different types of credit (e.g. store account, phone contract, personal loan) can help.
Credit age – the longer you’ve responsibly had credit, the better.
New applications – too many applications in a short time lowers your score.
Credit Score Ranges in South Africa (Approximate)
0 – 550: Poor (high risk)
550 – 650: Fair (some lenders may approve, but with high interest)
650 – 750: Good (most loans approved with reasonable interest)
750 – 850+: Excellent (best rates and highest approval chances)
(These figures may differ, use the Clearscore app to check credit score)
2.
How Credit Scores Affect Loans
Loan approval – banks and lenders check your score before approving loans, credit cards, car finance, or home loans.
Interest rates – higher scores usually qualify for lower interest rates.
Credit limits – better scores allow higher credit card or overdraft limits.
Insurance premiums – some insurers use your credit profile to calculate premiums.
3.
How to Build a Credit Score from Scratch (No Credit History)
Open a bank account – start with a savings or current account to show financial activity.
Apply for a small store account (e.g. clothing retailer) and pay it off in full each month.
Get a cellphone contract instead of prepaid – consistent monthly payments build history.
Apply for a credit card with a low limit (R2,000–R5,000) and use it responsibly (keep usage below 30%).
Never miss payments – set up debit orders to avoid forgetting.
Limit applications – avoid applying for too many accounts at once.
Check your credit report yearly – make sure your history is recorded correctly.
With 3–12 months of responsible credit use, you can build a positive credit profile, making it easier to qualify for larger loans such as car finance or a home loan.
4.
How to Improve Your Credit Score
Pay all bills and instalments on time.
Keep credit balances low (avoid maxing out cards).
Avoid too many new loans within a short period.
Check your credit report regularly – you are entitled to one free report per year from each bureau.
Dispute any errors you find on your credit profile.