Real Estate Investor Magazine South Africa May/June 2015 | Page 66

LESSONS

Credit Karma

How To Make Your Credit
Report Better And Increase
Your Credit Score
BY VANGILE MAKWAKWA
AND MEYER DE WAAL

I

have learned that being debt free does not lead
to a good credit score. When I was buying my
apartment, this added another six months to the
process because I had to improve my credit report and
credit score.
A credit report is a reflection of your credit history.
Every credit bureau has got a different score card.
First, do a credit report to get an indication if you
have a good score, a bad score or an average score. You
are classified as red for a low credit score, orange for an
average score and green for a good score.
A green credit score does not always indicate that
you will get a home loan because that credit score is
combined with affordability. If you have an average
credit score, however, you are measured over the
average population in South Africa.
There is about 20, 2 million credit active customers
in South Africa, about 35-37% of them have got a
good credit score (green). The rest of these customers
are orange or red.

“ You are shopping around
for debt.”
If you have a fin score with a fin file there is no
history on your credit score. The credit bureaux thus
cannot trace any information on how you spend your
money up unti the past few years, therefore, you has a
negative score.
When you go to a retail store and apply for about
four accounts, maybe only two will be approved. This
shows you are shopping around for debt and are
desperate. This is a warning to the bank. You are red
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MAY 2015 SA Real Estate Investor

flaged for being high risk with no cash flow. The bank
increases your interest rate which adds to a negative
credit score. Treat these store accounts with care. Pay
your account two days earlier rather than later because
this information stays on your credit profile for up to
two years. If you miss a payment you are immediately
downgraded.
It takes time to build a good credit score. However,
if you have missed one payment that information stays
on your credit profile for up to six months. Unpaid
Value Added Tax stays on your credit profile for up to
six months.
In April 2014, credit amnesty was introduced which
means some of the bad things on your credit score have
been wiped out. When you go to a bank to apply for
credit, you suddenly have got empty spaces on your
credit score because they cannot trace what happened
with your credit in the last six to twelve months. This
missing information on your profile can cause a delay
in getting credit. When there is a risk element involved
they increase your credit interest rate. It thus takes
longer or is more expensive to get credit. Your credit
score consists of five components:
1.
2.
3.
4.
5.
6.

Length of your credit
How you treat your credit
Do you pay regularly and on time?
The amount of your credit
Your most recent applications, and will also go into
Apllications from your last year or two that you
submitted that were successful

RESOURCES
Wealthy-money.com
www.reimag.co.za