Need to get a loan? Having a good credit score is crucial to getting the best loan for you. Learn how to improve your credit score with these 10 tips and more.
Importance of credit monitoring
Why should you keep track of your credit score? Your credit score is an important piece of information that you need to know before you make big financial decisions. Stay in touch with your credit information more frequently than once every year, so that you can monitor identity theft in case of drastic score changes or if your credit report is compromised. Verify your credit information regularly to ensure everything is correct.
How long does it take to improve a credit score?
Depending on what action you take on your credit score, the change can be noted between 7 to 14 days. However, credit payment activity only usually happens once a month. In three months you could drastically improve your credit score, although might depend on how long your poor payment history has been.
Improve your credit score with these 10 tips
- Find out your credit score by visiting a credit bureau like www.mytransunion.co.za or www.experian.co.za. Check that all the details are up-to-date and correct. Dispute any inaccuracies.
- Cut back on credit where you can: Assess whether you need all those accounts and which ones are adding value to your life.
- Settle your accounts before closing them: Contact the relevant credit providers to check that your name is no longer on their records.
- Reduce your debt to credit ratio: Experts recommend you keep your balance at 30% of the credit limit.
- Pay off debt: Create a budget that includes paying off creditors each month. Make sure you pay the minimum instalment, if not more.
- Seek debt counselling: If you are feeling overwhelmed, contact a professional debt counsellor who can help you with a budget and will approach creditors on your behalf to make arrangements to pay your debts while managing your living expenses. Visit www.debtcounsellingsa.co.za for more info.
- Be proactive: There’s nothing worse than dodging phone calls from bill collectors, wanting to know where your money is. Before they have a chance to contact you, let them know your situation and that you are making a plan to rectify it.
- Be consistent: Don’t just pay back debts when you have good months – try to pay off the same amount every month. If for any reason, you are unable to make the payment, contact your creditors immediately to inform them.
- Encourage stability: Ever noticed how creditors ask you about your life when deciding on whether or not to approve your credit? They are not simply making small talk but are trying to assess your risk. Putting down roots, holding down a steady job and even being in a relationship, can improve your credit score.
- Don’t apply for credit too often: Did you know that every time someone does a credit check on you, it lowers your score? While getting your credit rating back in tip-top condition, hold back on applying for credit.
It may take a while to implement these changes and improve your credit score but it will be worth it when you see the word ‘approved’ on your RCS Loan application.
Learn more about your credit score with RCS credit score education resources
- Credit Score Ratings & Ranges in South Africa Understanding your credit score is important if you plan on applying for a loan and improving your credit profile. Read this article to find out more about credit scores and how they could affect your financial plans.
- What credit score is needed for a loan? This article will serve as a guide to understand credit scores, and exactly how they are calculated so that you can better support your credit score growth.
- How to maintain a great credit score Maintaining it requires you to form smart financial habits such as not missing any account payments. Learn how to maintain your credit score in this article.
- Tips to Improve your credit rating Your credit score can empower you by giving you access to credit. Try these 10 tips to start improving it today so you can get the most out of it.
- Will a personal loan hurt your credit rating? Personal loans carry many benefits and risks that are important to know before applying, especially how it impacts your credit score. Read this article to find out how you can prevent your credit score from being negatively affected by a personal loan.
- The difference between a hard & a soft credit check? Hard and soft credit checks have different impacts on your credit score, so it’s important to know what they mean and entail. Learn about the difference between them in this article.
- How many credit bureaus are there in South Africa? Do you know what the credit bureaus are? They are the key to your financial history and credit score. This blog post serves as a guide to credit bureaus in South Africa.