Many South Africans don’t know their credit scores, even though your credit worthiness is one of the most important pieces of financial information about you.
Knowing your credit score rating is more important now than ever. In uncertain times, it gives you the advantage of knowing a bit more about what your financial options are.
Your credit score can determine whether you qualify for loans, what interest rate you’ll pay, whether you’ll be able to finance a new car, or if a landlord will consider you a suitable tenant. Even potential employers can request to see your credit report.
Everyone, from banks to retailers, will make up their mind about your financial trustworthiness based on your credit score. It’s more influential than any other reference you can provide.
1. Knowledge is power
It pays to know your financial profile – literally. A better credit score may help you to get better interest rates on loans and other credit facilities.
By law you are entitled to one free credit score annually from any of the credit bureaus. But only checking your credit score once a year may not be enough. A lot can happen in a year; a lot can happen in a few weeks, as we have recently seen. If there’s a sudden downward change in your credit score, you need to respond quickly.
Although the credit bureaus will only provide one free credit score a year, there are other ways to keep tabs on how well or poorly you’re being rated. For instance, you can access your credit status by using DirectAxis Pulse, an online tool that lets you check your status for free.
It provides a credit score rating – poor, getting there, good or excellent – which helps you to understand what a good or bad credit score is and how you’re currently rated. That’s a lot easier to understand than the three-digit number the credit bureaus provide. It also explains how the rating is calculated, tracks it over time and provides information on how you can improve it.
2. Early warning stops mistakes and scams
Credit bureaus can and do make mistakes. You’re more likely to pick these up if you regularly check your credit score rating. A sudden drop may indicate that something’s wrong. If this happens you can contact a credit bureau to find out why. If there isn’t a reasonable explanation, it may be a mistake.
It’s also possible that someone is using your personal details illegally, posing as you to borrow money or open accounts. The sooner you find out about this, the faster you can react and minimise the damage.
A common misconception is that regularly checking your score or using a tool such as DirectAxis Pulse, negatively impacts your credit profile. While it’s true that some credit checks, such as in-depth checks by banks or other financial institutions, can affect your score, tools such as DirectAxis Pulse do not.
3. Checking gives you control
Regularly checking your credit profile, particularly using a tool such as DirectAxis Pulse, which provides information about what’s influencing your rating, can help you to take action to improve it. By limiting negative behaviour, such as not paying accounts on time and responsibly managing your debt, you can gradually increase your credit score, which may be valuable to you during uncertain times ahead.
There are lots of reasons people don’t check their credit scores – they think it’s too difficult or are scared of what they might find. The reality is that it’s quick and easy, plus it puts you in a better position to maintain or improve it.
Take control of your credit score now to ensure you’re in a more secure position for any unforeseeable events in your future. Check your credit score rating today.