Getting loans in South Africa involves a lot of things. The borrower has to meet many different types of prerequisites to qualify for a loan, regardless of whether it is a long term loan or a short term loan. A very important prerequisite that lenders have when considering a loan application is a good credit history.
However, unforeseeable circumstances and bad luck can make even the most responsible individual’s credit score poor. When this happens many people make the mistake of not doing anything to correct it.
If you are also worried about your credit score then you would be glad to know that there are various ways through which you can improve it. Consider the following methods.
1. Avoiding Impulsive Purchases:
The most common cause for people’s credit score plummeting is impulsive purchases. It is very easy for a person to fall prey to temptation whether it is with regard to buying some new gadget or simply taking an impromptu vacation.
If you can avoid such situations by resisting the temptation, you would be helping your credit score significantly in the long run.
2. Living Within Means:
The kind of credit environment that most people live in today makes them think that they can spend much more than what they earn. Partly, the reason for this impression is the ease with which credit can be acquired these days.
However, living within your financial means should be something that you should instil into your lifestyle. This is the most certain way through which you can improve your credit score.
3. Look Over Terms And Conditions Of Each Credit Agreement:
While living within one’s means is important, sometimes credit is unavoidable. If you are faced with such situations then you need to look over the terms and conditions of the credit agreement that you are getting into.
The reason for this is that many credit agreements tend to have clauses that are not suitable for individuals. By checking the credit agreements carefully, you would be giving yourself a chance to spot and avoid such adverse clauses.
4. Maintain Repayments Consistently:
Every time you fail to pay the monthly instalments towards a credit account, it goes into your credit report and affects your credit score adversely. Therefore, if you already have a credit account, then the trick to improving your credit score is to maintain your repayments steadily.
5. Try To Close Off Credit Accounts Before Time:
While a loan in your credit history seeing out its term is not damaging to your credit score, your credit score can improve if you close off your loan before time.
To do this, all you would have to do is pay off the balance amount before time. Regardless of whether your loan has a penalty for early payoffs or not, in the long run doing this would benefit you.
Before you can go about improving your credit score, you need to know which areas of your credit score need improving. For this you need to understand your credit history and all the weaknesses inherent in it. This is why the first thing you should do to improve your credit score is check your credit report regularly.
You would be allowed one free credit report every year. This is beneficial because it would allow you to assess your credit standing at regular intervals. Interpreting and evaluating your credit report every year should, hence, be your priority.