A lot of people in South Africa are suffering from having a bad credit profile, and some are not sure how they got to that position. Managing your credit history is important in giving you access to things like credit, home loans and so on.
Your credit history will also determine how much credit you may end up qualifying for and the repayment terms you may end up paying. Here are some few tips that will assist you in getting and maintaining a good credit profile.
01. Live within your means – this is the major culprit with so many people who have bad credit, because most of them spend much more than they earn. The first thing you need to do is list your income and expenses and see if you are spending on your needs or wants. Focus on spending on your needs such as food, accommodation, transport, education, home bond and cut out on some of those unnecessary expenses such as entertainment and accounts.
02. Limit your wants – things such as expensive restaurant outings, memberships, accounts may result in you having more expenses than you can handle. Get rid of some of the wants that you don’t need immediately such as cell phone accounts, gym memberships or any other thing that you may not be making use of. Store cards need to also be better managed, which means that you only take whatever you need using a store card and restricting your use of them.
03. Pay all your debts in time – many people have a habit of not paying their debts, and have to wait until they get summons to pay their bills. Priorities your bills and pay them in order of importance, e.g start with your bond or accommodation bills, and work your way down to the smallest bill. To have a good credit profile try your level best to pay your bills in full and in time, and if for whatever reason you find yourself not able to pay get in touch with your creditors much earlier and inform them of your situation before they come looking for you.
04. Stick to your budget – it’s always tempting to go beyond your budget, especially when you are dealing with wants. Maybe it’s the latest iPhone 7 that’s out, or you just want to try out a new gadget that’s out – it’s always best to save or plan for such things. Your budget allows you to better manage your finances, if you didn’t put it on your budget don’t take it.
05. Don’t take credit you can’t afford – this is self explanatory, if you can’t afford to pay back your debts it will unfortunately show up on your credit profile. This will have negative long-term results on your profile and some financial institutions may turn your applications down due to your perceived risk profile.