Here are five easy steps to help you boost your credit score and secure a stronger financial future.
Step 1: Check Your Credit Report Regularly
Why this is important: Before you can improve your credit score, you need to know where you stand. Your credit report provides a detailed history of your credit usage and payment behaviour. In South Africa, there are three main credit bureaus: TransUnion, Experian, and Compuscan. You are entitled to a free credit report once a year from each bureau.
What to do:
Request Your Credit Report: Visit the websites of TransUnion, Experian, or Compuscan to request your free credit report. Review the Report for Errors: Look for any inaccuracies such as incorrect personal information, late payments, or loans you never took out. An error on your report may lower your score.
Dispute Errors: If you spot any errors, contact the credit bureau immediately to correct them. This can improve your score in no time.
Example: Imagine you find that a loan you never took out is listed on your report, lowering your score. Disputing this could instantly improve your credit score.
Step 2: Make Your Payments on Time
Why this is important: Your payment history makes up a significant portion of your credit score. Paying your bills on time shows that you are a responsible borrower and helps build a positive credit history.
What to do:
Set Reminders or Automatic Payments: Make sure you never miss a payment by setting up calendar reminders or automatic payments for your credit card, loans, and utility bills. If possible, always pay more than the minimum payment on credit cards or loans. This shows lenders that you are committed to paying off your debt faster.
Example: If you have a credit card with a minimum payment of R500, but you pay R700 instead, you’re showing lenders that you are capable of paying more and reducing your debt faster.
Tip: Late payments or missed payments can stay on your credit report for up to 2 years. So, keeping up with payments is crucial.
Step 3: Reduce Your Outstanding Debt
Why this is important: High levels of debt relative to your income or available credit can negatively affect your score. Lenders want to see that you’re not overextended and can manage your debt responsibly. The lower your debt-to-income ratio, the better.
What to do:
Pay Off High-Interest Debt First: Start by paying off high-interest debts like credit cards and payday loans. This will reduce the total amount you owe and free up money for other financial goals. If you’re working on improving your credit, avoid taking on new debt while paying off existing balances. The more debt you accumulate, the more your score will suffer.
Example: If you owe R10,000 on a credit card with a high interest rate, focus on paying that off first rather than accumulating more debt on other cards or loans. Once it's cleared, you’ll free up more funds for other expenses.
Step 4: Keep Your Credit Utilization Below 30%
Why this is important: Your credit utilization ratio - the amount of credit you use compared to your available credit - makes up about 30% of your credit score. High utilization can signal to lenders that you are dependent on credit, which could lower your score.
What to do:
Aim for below 30%: Ideally, try not to use more than 30% of your available credit. For example, if your credit card limit is R10,000, keep your balance below R3,000. If your balance is above 30%, make an effort to pay it down. This will help your credit score and show that you’re using credit responsibly.
Example: If you have a credit limit of R5,000 and you regularly carry a balance of R4,500, this high utilization ratio could hurt your credit score. Paying the balance down to R1,500 or less will improve your score.
Step 5: Avoid Opening Too Many New Accounts
Why this is important: Every time you apply for credit, the lender performs a “hard inquiry” on your credit report. Too many hard inquiries in a short period can signal to lenders that you may be in financial distress or unable to manage your finances. This can lower your credit score.
What to do:
Limit Applications for New Credit: Only apply for new credit when absolutely necessary. Avoid opening store accounts or credit cards unless you truly need them. Instead of applying for new credit, focus on managing and maintaining the credit you already have.
Example: Applying for multiple credit cards or loans in a short period can make you appear desperate for credit, which can hurt your score. Only apply for credit when necessary and try to stick to your existing accounts.
Common Challenges in South Africa
1. Debt Overload: Many South Africans struggle with too much debt, especially from high-interest credit cards or payday loans. This can make it hard to improve a credit score.
Solution: Seek debt counselling or consider consolidating your debt into one loan with a lower interest rate.
2. High Cost of Living: With the rising cost of living in South Africa, it can be challenging to stay on top of credit payments.
Solution: Create a budget to track your income and expenses, cutting unnecessary costs so you can allocate more towards paying off debt.
3. Lack of Financial Education: Many South Africans may not fully understand how credit scores work or how to manage credit effectively.
Solution: Educate yourself on how the credit system operates in South Africa. There are plenty of online resources and workshops on managing credit and finances.
Improving your credit score doesn’t have to be a complicated process. By following these five easy steps - checking your credit report regularly, making payments on time, reducing debt, managing credit utilization, and avoiding new credit applications - you can gradually improve your credit score and build a healthier financial future. In South Africa, many people face challenges like high debt and the rising cost of living, but with discipline and a clear plan, anyone can improve their credit score and achieve financial success.
Questions after the interview:
At the end of an interview there is usually an opportunity where you can ask any questions you might have. This is a great opportunity to show the interviewer that you are interested in the position as well as the company. It is a good idea to prepare a few questions before the interview – this can be done while you are doing research on the company.
Your questions should show the interviewer that you are a good candidate for the position. Try and avoid questions that are based on your personal needs and preferences, for instance:
- How much leave will I get in a year?
- Will I be considered for promotion in my first year?
- When will I get an increase?
- What time can I leave in the afternoon?
These questions are inappropriate at this stage and will probably raise concerns on the side of the interviewer. Should you be the successful candidate then all these questions will be answered in your letter of appointment so don’t waste this opportunity by asking these basic questions.
If the position is an entry level job or very junior then you are welcome to ask questions in line with the position, for instance:
- Why did the previous person leave the position?
- What would the successful person be tasked to do in a typical day?
- How does this position fit into the department and / or company?
- Could you explain the company structure to me?
- Is there any further education assistance or support?
If the position is more senior then you can prepare question around the following themes:
- current issues that will face the successful candidate;
- inter-personal challenges in the department;
- any process, technology or people challenges that needs to be attended to urgently;
- key result areas that need urgent attention in the first few months;
The above information should get you started. Prepare a few questions so that you can show your worth. Good luck with your interview!
