Five ways to improve your credit score

It's never too early to start building a good credit score. It affects your decisions when you're buying your first car, taking up insurance, or buying a new house or apartment. Building a good credit score will also give you peace of mind and help you make confident decisions when it comes to your finances.

Recovering from a bad credit record is not impossible, but it does require some commitment and discipline. 

Let's go over the basics. Here are five ways that you can establish and maintain a good credit score:

1.  Pay on time

This is perhaps one of the easiest ways to keep your credit score where it should be because all it requires of you is to make your payments on time. Outstanding or late payments will account for a big portion of your credit scores. To make sure this doesn't happen, automate your payments to ensure you never miss any. When you are rebuilding credit, you can't afford a mistake like missing a payment. And if you have a high balance, paying a set amount that's higher than your minimum could be a good way to get out of debt and boost your credit score. If you are unable to pay for something on time, make sure that your contact the creditor to make an arrangement.

2.  Keep the amount of credit you own as low as possible

Avoid using more than one credit card, especially if you are in the process of paying off your current credit card debt. More importantly, do not use a credit card to pay off the debt of another credit card. Take a look at the cards you already have and find out how you could save a few Rand on every day expenses. For example, some credit cards come with handy rewards programme that let you save whenever you swipe. Lastly, make sure that the majority of your income does not go towards paying off debt. 

3.  Only apply for credit that you need

Applying for a lot of credit within a short period of time does not help your credit score. Lenders may get the impression that you are finding it difficult to keep up with your expenses. Again, it helps in the long run to keep the amount of credit as low as possible.

4.  Check your credit reports regularly

If you default on payments, your credit profile is affected. This could make it much more difficult for you to get credit in the future. You can check your credit profile for free on the African Bank website. All you need to do is register online, and you can access your credit report any time, from anywhere you are.

5.  Identify and address any credit disputes immediately

In your credit report, look for debts or charges you don't recognize or that show incorrect information. In addition, check your actual credit score. Follow the steps below if you have been listed incorrectly:

Step 1 – Contact the bureau in question.

Step 2 – If you are not satisfied with the findings, you can call the Credit Ombudsman on 0861 662 837.

Step 3 – If you are still unsatisfied, you can lodge a complaint at the National Credit Regulator (NCR) by calling 0860 627 627.

It's never too late to begin working towards an improved credit profile. After all, it could mean the difference when you are trying to purchase your dream house, pay emergency medical expenses or further your studies one day.

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