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.
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.
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 40-60% 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.
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.
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