How To Boost Your Credit Score

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Credit scores are not only a measure of a person’s repayment ability but also an indication of their attitude toward credit. It reflects how seriously one takes their lines of credit, which can include short- and long-term loans, credit cards, retail credit, and home loans. Mismanagement of these lines of credit can have a negative impact on one’s credit score.

Know what your score is

Many South Africans are unaware of outstanding judgments, arrears, and unpaid bills that might be lowering what otherwise would be a perfectly healthy score. And you have to know what a problem is, to solve it.

Use tools from reputable credit institutions like Experian to review your personal credit score. Many unsecured lenders – i.e.: companies who don’t require collateral ahead of providing business funding, look at the personal credit scores of individual directors. So make sure you are in the healthiest credit position you can possibly be, before applying for short-term capital.

Make arrangements to repay

If you have checked your credit score, and have found lines of credit in arrears – repay them! You don’t usually have to repay in total, but get in touch with the credit provider and work with them on a repayment plan that works for you both. Whether it’s an old Store Credit Account card or a vehicle financing plan, providers do want you to be able to pay them back – but it’s up to you to ask.

Clear your record yourself

Get in touch with a credit bureau and send them the proof of clearance provided by your credit provider, to clear your record quickly. Many providers can take up to 30 days to do this for you – but the faster you get this done, the faster your score will start improving. It’s up to you to clear your name timeously.

Pay your levies

One of the most common reasons South Africans have judgments in their credit record is because of property levies, including rental properties. Body corporates and Home-Owners Associations are notoriously enthusiastic about sending letters of judgment against your name because of any lack of payment – even if it’s a bill you didn’t realise or remember you had. So keep an eye on all your incoming emails, particularly the address you’ve used to sign up for any credit.

Remove judgements from your name

Dealing with a judgement can be a daunting experience, but there are ways to improve your credit score. It’s important to reach out to the creditor who listed you as having a judgement and repay them as soon as possible. To do this, you will need to communicate with the attorney who handled the case and request that they draft a letter for the court. Once the court order has been rescinded, your name will be cleared. Remember to keep a copy of the rescission letter in case you need it in the future as proof of the judgement being cleared.

Communicate with your credit providers

Tough times can happen to anybody. If you’re worried that you might not be able to pay the minimum required amount back on any line of credit, speak with your provider – it’s a lot easier to work something out and restructure your repayment plan, than to fix a black mark on your credit score. No one wants you to go into debt on their books – be friendly and forthright, and find out what ways forward there are that means staying away from any arrears.

Be selective when you apply for funding

When you need to apply for business funding to keep your business running, it’s natural to feel overwhelmed. However, it’s important to avoid panicking and applying for loans from every traditional lender or SME funder you come across. Doing so can actually harm your credit score because each application is recorded by the credit bureau, and submitting multiple applications in a short period of time can raise red flags.

Be selective, and be financially savvy: Pick a provider whose goals align with your own, whose costs are fixed, and whose processes you understand.

Learn more about business funding options here.