Improving your credit record is a crucial step toward achieving financial stability and accessing better financial opportunities in the years ahead.
In South Africa, where credit scores influence everything from loan approvals to interest rates, taking advanced steps to enhance your credit record can make a significant difference.
To help you prepare for the New Year, we have compiled a list of actionable strategies tailored for 2025.
1. Review Your Credit Report Regularly
While checking your credit report annually is a basic practice, reviewing it quarterly or even monthly is an advanced step. Regular reviews allow you to spot inaccuracies or fraudulent activity early. You can make use of the RCS/Credit Gateway portal to check your credit report in minutes - for free.
Action Tip: Set calendar reminders to review your credit report at least four times a year. Dispute any inaccuracies immediately to ensure they don’t negatively impact your score.
2. Pay Off Debt Strategically
Rather than spreading your payments evenly across all accounts, prioritise paying off high-interest debt first. This approach, known as the avalanche method, reduces the total interest you pay over time and helps you clear debts faster. Alternatively, the snowball method—paying off smaller balances first—can provide psychological motivation.
Action Tip: Evaluate your debts and choose the repayment strategy that best suits your financial situation. The aim of strategically ‘attacking’ certain debts will ensure that you help your credit record grow, allowing for better credit options down the line.
3. Diversify Your Credit Portfolio
A diverse credit portfolio, including a mix of credit types like personal loans, credit cards, and vehicle finance, demonstrates your ability to manage different kinds of debt. However, only take on new credit if you can afford it and if it aligns with your financial goals.
Action Tip: If you have only one type of credit, consider responsibly adding another, such as a small personal loan or retail account, to build your credit mix.
5. Utilise Loyalty Programs for Discounts
Several South African retailers and financial institutions offer loyalty programs that provide discounts or cashback on purchases. Many South Africans only scratch the surface of the loyalty discounts at their disposal, but by leveraging these programs, you can free up funds to allocate toward debt repayments or savings, indirectly improving your credit health.
6. Automate Payments to Avoid Late Fees
Late payments are a major cause of credit score drops. Automating your payments ensures you never miss a due date, especially for recurring bills like utilities, credit cards, and loans.
Action Tip: Use banking apps or platforms like PayFast to set up automatic payments. Ensure your account always has sufficient funds to avoid bounced payments.
7. Increase Your Savings Buffer
A strong savings buffer can not only be handy in a sudden emergency, but also indirectly improves your credit record. If you have a solid amount of savings on hand, not only does it reflect positively when it comes to your financials, but will also ensure that you aren’t over utilising credit.
Action Tip: Set yourself up to build up to around three to six months’ worth of expenses. Consider high-yield savings accounts or money market accounts to help achieve your goals.
8. Use Credit-Building Tools
Several tools are available to help South Africans build their credit. For example, some financial institutions offer credit-builder loans specifically designed to improve your credit score over time.
Action Tip: Explore credit-builder options through providers like RCS or inquire with your bank.
9. Engage a Financial Advisor
A financial advisor can provide tailored advice on managing debt and improving your credit record. They can help you create a personalised financial plan that aligns with your goals.
Action Tip: Consult a certified financial advisor through organizations like the Financial Planning Institute of Southern Africa.
Improving your credit record in 2025 requires a proactive and informed approach. By implementing these advanced strategies, you can not only enhance your credit score but also secure better financial opportunities in the future. Remember, the key is consistency and vigilance. Regularly monitor your progress, adapt your strategies as needed, and seek professional guidance when necessary.
