How to Use Personal Loans to Build a Credit Score in South Africa – Our Guide
December 26, 2019Having a good credit score opens a whole lot of opportunities for you. A good credit score is an excellent reflection of your financial history. Today, more and more countries are becoming dependent on credit to purchase and to make financial decisions.
Your payment history, amounts owed, credit history length, and types of credit are some of the main factors that make up a credit score. Building a good credit score isn’t just about to help you get loans; a good credit score will help you save money and make your financial life better.
In South Africa, a credit score is between 330 and 850. One of the best ways to build a credit score is to use personal loans. You can use personal loans in various ways. For example, get a personal loan to pay off your credit card debts, or use it to stay on top of your other payments. These ways will reflect on your financial report that will build up your credit score.
Here are some tips for using personal loans in South Africa to build your credit score:
Identify the Best Places to Get Personal Loans
If you’re thinking of getting a personal loan from a bank in South Africa, think again. Banks aren’t keen on doing business with people with bad credit. Hence, you might want to skip the banks and look for other places or ways where you can get personal loans.
Fortunately, there are online lenders and credit unions that you can try. Keep in mind that it’s best to apply for a personal loan to only one lender. Loan applications to multiple lenders can worsen your credit score because each lender will do a credit check.
Borrow What You Need
It could be tempting to borrow more than what you need when your personal application is approved. Don’t give in to this. Keep in mind that your goal here is to build up a good credit score. If you bite more than you can chew, you might further damage your credit.
Read the Fine Print
When it’s time to sign a personal loan contract, read every detail. Before accepting the deal, make sure that you’ve read everything on the document thoroughly before you sign it. Be mindful of late payment penalties and hidden fees.
Pay on Time
Your lender in South Africa may make necessary adjustments when you can’t pay on time. However, it’s best to make it a habit to pay on or before your due date. Late payments are a strong indicator of financial difficulties, which could, later on, affect your credit score.
Remember, your credit score is in your hands. A bad credit score can have a significant impact on your life. The good thing is that you can use personal loans in South Africa to build your credit. There are online lenders and credit unions in South Africa that can grant you a personal loan.
Compare different personal loans before you finalize a deal with a lender. Make sure that you’re getting the best interest rates and value for money.
If you’re in South Africa and are looking for personal loans, feel free to contact Hoopla Loans today! We’re happy to help.