Credit is a very useful financial tool for people to use to improve their lives. It’s possible to live without using credit, but when it comes to making big important life purchases, like a car or home, not having access to credit can be an obstacle if you don’t have the cash.
A ‘bad’ credit rating usually means a low score – we call this a poor credit rating. There are several reasons why one could have a poor rating, including a credit history with negative information on it, such as arrears or judgments or poor repayment history.
If you do not have a credit history, you can build this up by applying for smaller amounts of credit and building a good payment history.
If your poor score is due to having a bad credit history, you can remedy this over time by paying your arrears, complying with court orders, etc.
So how can these affect your life?
Access to credit or more credit becomes harder. One of the aspects looked at is your payment history to determine your risk. If you have a history of skipped payments, lenders will see you as a greater risk.
Taking out service agreements like cell phone contracts could be difficult. Cell phone providers use your credit profile as part of their decision process to see how reliable you are at paying your monthly instalments on accounts.
Applications for vehicle or home loan finance could be denied. Your credit history and credit score help lenders determine your creditworthiness; this is reduced if you have negative information on your profile. That would make it hard for you to get financing for a car or a home.
You may pay higher insurance premiums since many insurers look at your credit profile as an indication of risk. The lower your credit score, the more risk you may pose to them. Building up a good credit repayment history is a great way to lift your credit score.
To improve your score, read the article at https://knowledge.finfind.co.za/how-do-i-improve-my-credit-score.
You can also register on Up, powered by Experian to help you understand your own credit position and get information on what you can do to get it to improve.
Up, is a simple web-based app developed by Experian 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.
Next steps:
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