What Is a Good Credit Score and How Can You Improve One That’s Not-So-Good?

April 30, 2019
what is a good credit score

Have you ever had to face the embarrassment of getting declined for a loan or line of credit? If you’re anything like the average South African, then you likely have.

Your credit score plays a huge role in whether lenders trust you or not. So, what is a good credit score? How can you improve your score to convey to lenders that you’re worthy of a loan? Keep reading to get all the details.

Credit Score Ranges

If you need credit or a loan, then you’ll find out fast how important your credit score is. In South Africa, a good credit score is a valuable asset. So, what is the range of credit scores?

Credit scores in South Africa usually range from 330 to 999. Your score should fall somewhere in this range. Younger adults may find themselves without any credit at all.

What is a Good Credit Score?

So, what do financial bureaus consider a good score? In general, you’ll appear more trustworthy and credible as your score increases. Here’s a breakdown of the score ranges and what they mean to financial institutions:

  • 650+: Minimum risk for lenders, near perfect score
  • 620-649: Low risk, an excellent score
  • 600-619: Average risk, a good score
  • 581-599: Average risk, an average score
  • 490-581: High risk, a low score
  • Below 490: Maximum risk, bad score

In South Africa, the average credit score hovers around 500 and 600.

Factors that Impact Your Credit Score

What types of things will increase or decrease your score? Here are a few factors you need to know about:

  • Your payment history
  • The total amount you owe to lenders
  • The length of your credit history
  • The types of credit you currently have
  • New credit you’ve applied for

South Africans have a right to one free credit report each year from each bureau. That includes TransUnion credit bureau, Experian, XDS, and Compuscan.

It’s best to check your credit history every year. You need to verify all the information is accurate.

How to Raise a Low Score

There’s a big difference between having no credit and bad credit. It’s easier to build credit with no payment history than to repair mistakes and bad credit. How can you raise a low score? Here are a few tips:

  • Always pay your bills on time. When you can’t, contact the lender and negotiate a lower payment or later due date.
  • Fix your debt ratio by only using 20-30% of your credit lines.
  • Don’t open new accounts until you’ve raised your score.

It takes time and effort to raise a low score. Don’t expect results overnight. Credit scores reflect consistency, so you’ll have to show that as you make payments to lenders.

Managing Your Credit Score Going Forward

So, what is a good credit score? In South Africa, you’ll want to at least reach an average score between 500 and 600. This will give you the ability to get loans when you need them.

Are you ready to take control of your finances? Learn how a Hoopla loan works, and reach out to a representative when you’re ready to move forward.