Why your credit profile is a lot like online dating
It's a natural human desire, to want somebody to like us. And we'll go to the ends of the earth to make that a reality. Throughout history, people have conquered nations, written great works of literature, recorded songs that haunt the soul, all to win over that special someone.
Look at online dating. For a swipe right, singletons will filter edit their pictures into the realm of animation. They will talk up their positive points, maybe even massage the truth a little, all in a bid to look as attractive as possible. Why? Because a prospective date brings with it more than just dinner and a selfie. There are dreams yet to come true, of weddings ripped straight out of fairy tales, of missing links found, of companionship.
So, all that profile editing, all that self-improvement, it makes sense. It works. And yet, there's another online profile that everybody has, one that most rarely pay any attention to.
It's called your credit profile. Right now, there are plenty of potential suitors interested in it. They are credit providers, willing to finance your home loan, or your first car, or your dream wedding. These could be meaningful relationships that could change your life. But, have you taken a look at your profile lately? There could be a reason why every credit provider is swiping left. And that means, your dreams will remain just that.
What is a credit profile?
Your credit profile is a history of your relationship with credit. What every credit provider really wants is someone who will be able to honour the terms of their contract. That means, paying your loan instalments on time.
Your credit profile is comprised of a credit report and a credit score. Your credit report is a summary of how you have handled credit accounts, the types of credit you have taken on, and your history of payment. Credit providers will use this to determine whether they should extend credit to you, and on what terms.
Your credit score is a number rating assigned to you, based on your credit history data. Though individual credit bureaus may differ in terms of their rating scales, there is a simple rule of thumb: the higher the score, the better. A high credit score means you are more likely to get credit when you need it, and with more favourable terms for interest and repayment options.
I need a loan urgently! Where do I find my credit report?
You have the right to access your credit report for free, once a year, from any of South Africa's credit bureaus. But there’s an easier option.
You can get your credit report for free, anytime you want, from African Bank. You don’t even need to own an African Bank product. Simply click here to register and take control of this important aspect of your financial life.
My credit score is low. What do I do now?
A bad credit score isn't the end of the world. In fact, you should see it as the beginning of a bright new future. Now that you know the state of your credit profile, you can start the work on improving it. Here are a few tips that will help you to do just that:
- Pay your bills on time
After all, this is what credit providers want to see. Nurturing a record of regular, timeous payments will show that you are responsible with your credit and boost your score.
- Draw up a monthly budget
Life can easily get complicated with all the money going in and out of your account, so drawing up a budget will help you to prioritise your monthly payments and use your salary more effectively.
- Set up an emergency fund
Safety is no accident! Being prepared is a conscious decision. By building a safety net in the form of an emergency fund, you can protect your ability to continue paying your bills on time. In your budget, set aside a portion of your salary that you can stash in a savings account, preferably one that offers the best interest rates. This emergency fund will come in handy if, for instance, your geyser bursts or your fridge packs up.
I'm struggling to pay back my loans. How do I protect my credit score?
With another loan. No, seriously. With a consolidation loan, you can combine multiple debt repayments into one easy-to-manage loan. That means one monthly repayment and one interest rate — it's a more affordable option than having to pay multiple creditors.
Used wisely, a consolidation loan will simplify your expenses and put you on the road to financial freedom. African Bank offers Consolidation Loans, combining up to five different debts, up to R250 000. Read more about that here.
Hey good looking!
Now that your credit profile is looking pretty, you're bound to get lots of offers. You've earned the right to be choosy. Shop around for the best interest rates and repayment options before settling on "the one". After all, you have big plans and the decisions you make today should get you one step closer to your happily ever after.