How to get a great credit score

Are you looking for the home of your dreams? Tired of renting? Or is it time for you to leave the nest? Whatever the reason may be for wanting your own property, you will first need to qualify for a bond if you do not have heaps of cash lying around. Your credit history and debt-to-income ratio will determine if you are eligible for a home loan. Your score will also influence the interest rate that you will be offered when paying back the money you borrow.

How does a credit score work?

There are four main credit bureaus in South Africa: Experian, TransUnion, Compuscan, and XDS. Each bureau has a different way of calculating your score. They take into account different forms of information on you, how you pay your bills, and the debt you may have.

It is pretty simple to understand how a credit score works. The higher your score the better your credit health will be. High credit scores mean that you are a low-risk client and it will be easier for you to borrow money at lower interest rates. A low credit score would be unfavourable as you are a high-risk to lend money to. This can prevent you from obtaining the home you imagine living in. 

If you have a low credit score, the good news is that you can improve it. The bad news is that it will take time, depending on how severe it may be. Even if you do have a great credit score you should continue to maintain it.

Here are simple steps you can follow to maintain and boost your credit score:

• Pay your bills 

Your payment history is an indication of how reliable you are when it comes to paying your bills. It is considered by lenders as a good predictor of how your future payment performances will be. Thus, it is important to ensure that all your bills are paid in full on time every month. Try to pay off the debts with the highest interest rates first as it will avoid you getting into more expenses. With that said, do not focus on selected bills only. Aim to pay all your bills such as credit cards, loans, your rent, utilities, phone bill and other bills you may have. 

• Automate payments

By setting up regular automated payments with your bank you can avoid the hassle of physically paying your lenders. You will not have to spend the Saturday after payday in busy malls. It also ensures that you do not miss a due date. Set your payment dates a day or two after you receive your salary. Sometimes your employer may come into delays. You do not want this to have a negative impact on your credit history. 

• Conduct regular checks

Make it a habit to check your credit report on a regular basis. Ensure that all details are correct and up to date. Checks can also serve as a guideline on the progress of your credit score and how much more you need to go to make your property dreams a reality. It can even help to identify if there have been any fraudulent activities taking place under your identity. 

• Realistic repayment plan

If you are falling behind on your payments it will be wise to negotiate a new repayment plan with your credit provider. A great way to combat your debt is to reduce the monthly repayment amounts and increase the length of the loan.

• Proof of settlement

If you have any debt or judgments against you, aim to settle them as soon as you can. Remember to get proof of the settlement and keep it safely for future reference. This can also be used to clear the negative listing with the credit bureau.

Once you have followed these steps to get a great credit score you can start shopping around for the home you have always wanted. Contact Knight Frank today and we will help you find the property that best suits your needs.