Property Advice

Safeguard your credit score

Private Property South Africa
Sarah-Jane Meyer |
Safeguard your credit score

Most home buyers can’t afford to pay cash for a property, which means they need to apply for finance.

To ensure your home loan application is approved, a good credit score is crucial. It will also ensure your future financial success.

Credit score

Your credit score is linked to your credit record. This is data retained by the major credit bureaus and provides credit providers with important financial information about you.

Your credit record is a complete history of all your major financial transactions over many years. It includes details of the money you have borrowed, whether or not you have repaid that money and if you repaid it on time.

Every time you apply for a loan from any financial institution, they will check this record before deciding whether or not you are creditworthy.

A history of consistently repaying your debts on time and in full indicates to the bank that you are financially responsible. It will significantly improve your chances of having your credit application approved. A bad credit record of missed and late repayments will have the opposite effect.

Before applying for a home loan or any other finance, you need to check your credit score to ensure everything is in order.

You are entitled to one free credit report every year from each of the credit bureaus operating in South Africa. The various bureaus may have different data about you on their systems, so it’s important to check with more than one to ensure your credit record is immaculate.

Improving

If your credit record needs a bit of work, you should take steps to improve your score before applying for a home loan.

Pay your existing bills on time -including your rent.

Don’t take out further debt unless you really have to. If you do, make sure you can afford the instalments and create buffers for interest rate changes.

Keep in mind that every time you apply for credit, this is noted on your record. Credit providers can see how often you apply for credit and will view frequent credit applications as a higher risk.

Even if you are not considering buying a home just yet, safeguarding your credit record is still very important. You will need a good credit score when you do enter the property market or need funds to buy a car or for some other large purchase.

Writer: Sarah-Jane Meyer

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