6 factors that could impact your credit score
Your credit score can be influenced by many factors; here are a few that may influence your credit report or score.
- Having too many accounts and maxing out their limits could potentially damage your score as well. It’s best to use less than 75% of your limits on these types of credit.
- Missing payments on debt is also a sure way to damage your report and score. This creates adverse information in your report.
- Paying a lump sum on an account and then skipping payments after could also be seen as negative behaviour. Even though the account is technically not in arrears as some scoring models look at monthly payment activity.
- Other adverse actions like having a judgment on your profile or going under debt review.
- Enquiries for credit information that are performed by lenders when you apply for credit – multiple enquiries can affect your score since it is seen as risky behaviour.
- Incorrect information on your credit report. It's important to check your credit report regularly and dispute any incorrect information with the credit bureaus in South Africa.
What can I do to build an excellent credit score?
Striving for an excellent score shouldn’t be the goal, but rather a result of constructive and responsible credit use. An excellent score can take a while to build; they are also sensitive to many different factors and can fluctuate. If consumers use credit responsibly, take out the right kinds of credit, and pay their full instalments on time over a period, a good or even excellent score may follow.
The best way to build an excellent score and maintain it is to repay your accounts on time, and the full instalment amounts each month. At the end of the day, being responsible with credit is how you build or maintain an excellent score.
Experian has built a simple web-based app called Up, that allows individuals, including business owners, to view their personal profile data as hosted by the bureau. This data covers historical credit repayment behaviour as well as a range of other personal information (address data, contact information, historical employment and recent foot-printing enquiries). Furthermore, Up provides a range of learning material in the form of articles and videos, and includes a nifty budgeting tool, allowing for monthly budget planning and access to historical budgets.
Up is available to free of charge – register here to access your personal information and even receive alerts on changes to your bureau profile data as and when it happens.