5 Ways To Keep Your Credit Score Healthy
A good credit score is the foundation of a healthy financial lifestyle. It plays an important role in your ability to do things like renting or buying a house with a mortgage, buying a car on finance, getting a loan, and even getting a mobile phone contract. A credit report and the data it contains are what determine your credit score.
“The problem is, while most Namibian consumers know what a credit report is, far fewer understand how it influences their credit score and how it can help them access credit and achieve their financial goals,” says Lara Burger, the Namibia country manager at information and insight provider TransUnion. “That’s why a vital part of the journey to financial health is maintaining and improving your credit health to ensure a good credit score.”
When you apply for credit, banks and lenders will access your credit report to see if you’re suitable for credit. Landlords will check it before they rent a property to you. If you have a good credit score, you might receive a better interest rate. But a credit report with negative listings, such as defaults and judgments, or too many enquiries for loans or credit over a short period of time, could result in a low credit score. This could mean you may pay a higher interest rate, or even be unable to access the credit you want.
So how do you maintain your credit score and your financial stability?
Pay your bills and credit cards on time
One of the biggest influences on your credit score is your account payment history: how you manage accounts, and whether you pay your accounts on time. If money is tight, you may not be able to pay your full balance each month, but try to pay at least the minimum balance each month. You will pay more in interest, but you’ll help your credit score and your ability to access credit.
Stick to a budget
Creating, and sticking to a budget is the foundation of healthy personal finances. If you need to save money and finances are tight make simple changes like cooking more at home, instead of been tempted to go out. Cut down on unnecessary travel and use the money you’re saving on fuel or public transport to pay off some accounts. By budgeting and paying back your bills on time, you’ll be on your way to getting back into financial shape.
Limit your amount of debt
One of the best ways to improve your credit score is to avoid over indebtedness and maxing out your credit facilities. Check the credit limits on your loans, accounts, credit cards and overdrafts, and then see how much you owe on each of them. Make a plan to maintain a healthy amount of headroom in your lending facility and pay off as much of your outstanding balances as possible if you have the means: it will reflect on your score and ease the pressure on your finances,” says Burger
Try to keep your utilisation of your current credit facilities to less than 35% of your limit. For example, if you have a credit card or a store account with a limit of N$1200, try to maintain the amount owing balance at under N$400.
Check your credit report
You’re entitled to one free credit report every 12 months. Use it. Get a copy of your credit report from TransUnion and check it carefully for inaccuracies, like accounts that you don’t recognise or incorrect information about late payments. Disputing this kind of inaccurate information, and getting it removed from your credit report, can improve your credit health. It can also help detect fraud if someone else has applied for credit in your name.
You can get your free credit report by sending an email with your ID copy, name and surname and contact number to SA_Namibia-FreeReport@transunion.com.