While the mere mention of the word credit has the potential to send many people scurrying off in different directions to avoid getting sucked in by it, it’s unfortunately something some of us can’t completely avoid – unless off course, you have millions of rands lying in the bank just waiting.
As much as credit is seen to be bad and to be avoided it can also be a good thing if used right, which is the reason why one needs to build a good credit record. Building a good credit history makes it possible to be approved for loans you might need to secure your future, and besides, if credit is managed right and used for the absolutely necessary stuff, it can be a catalyst to building wealth.
Having a good credit history makes it possible for service providers to gauge how much of a risk you are, a good rating means more financial options and opportunities – this makes it possible to apply for a bigger bond with home loan providers at low interest rates, plus you can also get various other loans from other institutions at affordable rates.
We’ve found some ways you can improve your credit score and build up your credit rating which should no doubt allow you to build your wealth:
Know your credit score
You should always know where your credit rating is at all times, especially if you are planning to apply for a loan of a substantial amount. You can do this by checking with TransUnion and Experian, which are the country’s two biggest credit bureaus. The good thing is every South African citizen is entitled to two free reports a year.
Don’t take on too much debt
Credit providers might call to offer you more credit than you need, don’t be tempted. Avoiding such easy credit loans will ensure that you aren’t over-indebted and in a position of not being able to pay. It’s much easier to have one or two credit cards, and even then to use them when you absolutely need to.
Pay your credit cards on time
Always make certain to never miss your credit card payment date, no matter what happens, as this reflects badly and creditors will see you as risky. To avoid skipping payment days because you’ve forgotten, rather set up a debit order or perhaps have a reminder for making online payments.
Pay more than your monthly bill
If you have credit, which you’re paying for monthly, try to pay in slightly more than the required amount, not only will this get you ahead with your debt and decrease the overall interest, but it also shows creditors that you’re able to manage your debt, and should you in the future wish to take out another credit loan, you’re likely to receive it.
Close all unused credit lines
If you have store cards or credit cards that you have not used in more than three months, close them down. This will help boost your credit rating because there are fewer lines of credit available in your name. Plus, having fewer credit cards will help you avoid spending money unnecessarily.
If you don’t have any credit history yet, start!
Despite the fear that comes with credit, it’s possible to have debt and manage it successfully and to your advantage. Not having any credit history will count negatively against you as financial institutions will want to see a record of how you manage debt. If you don’t have any credit record yet its best to start building your credit rating sooner rather than later, a good way to start is by getting a credit card in your name and keeping up the repayments for a year so you can have a positive rating, or better yet you could apply for a loan from Auto & General a great reason to do home improvements – personal loans are also considered when it comes to rating your credit.