A South African Borrower’s Guide to Overcoming Poor Credit – What to Know

January 09, 2020

Why is bad credit so common in South Africa?

The basic explanation for the commonality of bad credit in the country simply lies in the fact that it is easy to seek loans from South Africa’s lenders even if borrowers may not necessarily have the means to pay back. Regardless of how low the interest rates may be or how much they’ve done to alleviate the burdens of paying, the majority of South African borrowers still find themselves scoring an unacceptable credit score. Although more than half of South Africans claim that they have bad credit based on past transactions and their borrowing history, the problem doesn’t stop there.

South Africa’s problem with bad credit does not stop at the simple label of “bad” or “good” as it extends all the way as to how bad the credit really is. Depending on your borrowing history, chances are that you might fall in between bad and terrible credit or be at either end of the poor credit spectrum. 

If you suspect that your credit is truly bad, however, then there’s no need to lose hope because the solution to the problem can be attained by knowing what to do. To make the entire process much easier, let’s go over everything you need to know about raising a poor credit score as best as possible:

What constitutes bad credit in the first place?

Bad credit, to put it simply, is a classification or title that is given to any low credit score. There are several ways as to how you can exactly attain bad credit in the first place, such as:

  • Failing to keep up with prior or monthly payments
  • Not making payments on time
  • Missing monthly payments or dues
  • Having past bankruptcies
  • Receiving tax liens and legal judgments

What’s so bad about bad credit?

While it may seem fairly minor at first, bad credit is a serious issue that should be worked on as soon as possible if you want to enjoy your life and be as debt-free as possible. Know that lenders may give you higher interest rates or outright deny your loan applications if you have bad credit. This shows how important it is to take all the right steps to fix your financial status. Aside from higher interest rates, however, bad credit can also increase other financial obligations that you may have, such as insurance rates, phone bills, and utility costs. 

What can you do to fix your bad credit?

The first step towards getting over your bad credit problem is to admit that you actually have one in the first place. At times, you may end up cutting yourself some undeserved financial slack, so it’s best to make sure that you keep yourself accountable by asking someone to help you out. 

After you’ve admitted that you may have a credit problem, the next step is to check your actual credit score by requesting for a copy of your credit record so that you can set a target and take the right steps towards boosting your score. Before you settle on your baseline credit score, however, it is recommended that you check for mistakes or potential opportunities to boost your credit score with unrecorded accounts that have a good payment history. Once you’ve laid all these out, the final step is to make amends by settling balances, paying on time, aiming to make on-time payments, and adding new accounts to pay for punctually. 

Having a poor credit score is a burden that the majority of South Africans carry with them. Because of this, it’s important to know that you won’t have to go your whole life with a poor financial record to define you. By taking the right steps towards improving your credit score, you can overcome the hurdles of bad credit as soon as possible!

If you are in South Africa and looking for bad credit loans, Hoopla Loans is your best option. Get in touch with us to see how we can help.