You are saving for a deposit and looking at numerous houses for sale – but before you start applying for bonds, ensure your credit record is in order. The better your credit record, the more negotiating power you have with your bank or mortgage originator. A better credit record will typically translate into better terms on your home loan, which will save you thousands of rands over the period of the loan. Here are some tips to improve your rating: Always pay your bills on time Don’t wait for a phone call or final warning letter as reminder – pay bills before they are due. Make sure you have money in your bank account to pay off debit orders, as a failed debit order will immediately reflect on your record and will cost a fortune in bank charges. If you cannot afford payments in a specific month, explain yourself to the creditor and make alternative arrangements. If you have failed to make payments in the past, explain the reasons to the creditor, for example, illness, redundancy, etc. This will be added to your file and can help you to get credit in future. Do not let late payments end up in court Once you have received a summons to appear in court for non-payment, you will have problems getting credit in future. Therefore, try to make alternative arrangements with creditors, or ask for professional help when you fall into financial difficulty. Where you work, stay and bank The purpose of a credit record is for creditors to assess how risky it is to extend a loan to you. The longer you stay at the same place, work at the same company and use the same bank account, the less risky they think you are. It is important to note that family members who live or used to live at the same address as you, can influence your credit rating too. If you are estranged from your family, inform the credit agency. Also, registering as a voter can help your credit rating – the electoral register is the first place agencies look to check your home address. Even if it is not election time, you can still contact your local municipal electoral office to double check your registration and details. Banks (and other companies) will also use previous dealings with you to help assess your behaviour and determine whether you will pay back loans. If you, for example, are not regularly paying your credit card, it is unlikely that the bank will think you will be a responsible home loan repayer. Check your credit record Ensure the information on your credit record is accurate and up to date. There are various websites available where you can get access to your details. www.transunion.co.za allows you to check out your credit record for free, while a detailed report is available for R20. Check everything – are all your debts correctly listed? Are there any inaccuracies on your repayment history, or previous address details? Errors on the latter can lead to you being judged on someone else’s credit history, or incorrectly link your finances with someone else’s. Close inactive accounts. If you disagree with anything on your file, write to the agency and request that it is changed. Sometimes you will have to correspond with the company that originally filed the data. Be concise, clear and accurate. Do not pay credit repair agencies to improve your credit rating – if there are mistakes on your file, you can fix them yourself for free. It is recommended to check your credit record once a year or 18 months, or before you make any big loan applications.
Improve Your Credit Record
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