How to improve your credit score rating [Update]

How to improve your credit score rating [Update]

Posted by Brendon Carpenter on 20 Jun 2020

how to improve your credit score ratingCoping with the financial fallout from Covid-19 is not easy, making debt management not only a priority, but a difficult juggling act. However, you can improve your credit rating by following our guideline.

Estimated reading time: 5 minutes, 43 seconds.


Buying a car can be tough when you’ve been blacklisted. That’s why we’ve put together this handy guide to help you clean up your credit record.

The global Coronavirus pandemic has changed all our lives and the resulting economic woes from the lockdown have made things worse with many people losing jobs or losing income.

Keeping up with payments has not been easy. However, the onus is still on you as the debtor to manage your finances and keep from becoming blacklisted.

All of the banks and most commercial enterprises have plans in place to help people through the crisis but many South Africans are faced with the nightmare of trying to get finance once they’ve been blacklisted, or have outstanding judgements or defaults listed against their names. Bad credit can lead to steep interest rates, large down payments or, in worst case scenarios, your finance application could be declined.

As a general rule, it’s a good idea to check your credit score regularly. The National Credit Act 34 of 2005 entitles you to a free credit report annually. We recommend you take advantage of this service as it allows you to keep a finger on your financial pulse.

Some institutions that offer this service include:


Wikus Olivier from Debt Safe, a debt counselling service, writes, “the information retained by credit bureaus is regulated by the National Credit Act. Your credit profile is basically built from your credit history. The Act specifies how long this information may be kept on your credit profile. Payment history may be kept for two years. Adverse listings vary from two to five years. A judgement will typically be on your credit profile for five years”. He explains “all of these factors combine to make up your credit score”.  Transunion is the best place to get a credit check; there is a small fee, but it is a quality report.

Transunion says: “Your credit score is calculated by a credit bureau, and while it is based on your credit report, it also takes account of how you pay your bills, how much debt you have and – importantly – how all of that compares to other credit active consumers.

“Your credit score is not an endorsement or a criticism of you or your credit behaviour. It will also not determine whether you qualify for credit. That will depend on the credit provider’s own credit granting criteria – their own way of scoring their assessment of your risk.”


  • Check your credit report with a fine-toothed comb

Discrepancies can and do happen. Make sure that all the accounts listed under your name do in fact belong to you and that details (like your ID number) are listed correctly. If you find a mistake, try to obtain a copy of your report from at least two other agencies. Compare all three reports to determine whether the error exists on all of them. If it does, you’ll need to dispute this with the credit bureaus to clear your name. Remember to keep following up until your report is correct.

  • Make sure all doctors bills are paid in full

Unpaid medical bills are the leading cause of negative credit records. This is because patients rely on medical aid schemes to take care of their bills and are often unaware of outstanding amounts until they receive a legal letter.

  • Don’t open lots of accounts in close succession

Opening several accounts in the same month could flag you as a high-risk debtor.

  • Only open an account if you know you can afford the repayments

Do a budgeting exercise each month to ensure that you know what you can afford to spend before making any purchases on credit. Your credit repayments should never exceed 30% of your monthly income. Aim to keep your credit repayments at below 20% of your monthly income.

  • If you suddenly find yourself in financial trouble, alert your creditors

You’re unable to predict unfortunate circumstances like retrenchments or illness, and your creditors are aware of this. If you do find yourself in unfortunate circumstances, contact your creditors immediately. Your creditors don’t gain anything by having to blacklist you and are usually willing to negotiate new payment terms that allow you to honour your debt. Make sure that all new agreements are documented in writing, and ensure that you don’t default on the new repayment plan.

  • If you’ve run into financial trouble, don’t run up any more debt!

Make sure you pay off everything you already owe before taking out any further loans.

You may find yourself in a situation where debt is mounting faster than you can repay it and a debt consolidation loan can be a good solution. This strategy involves paying off your smaller debts with a single loan that has a longer repayment period. With lower monthly installments, you can more easily make your repayments, thus avoiding late payment charges and preventing any further damage to your credit score.

  • A small balance looks better than a zero balance

This might sound counterproductive, but having a small outstanding balance on an account shows potential creditors that you’re able to manage your accounts responsibly.

  • Don’t overextend yourself

Whilst a small outstanding balance on an account can be helpful, having ten different accounts all with outstanding balances can raise a red flag to financial institutions. Try to limit yourself to just one or two accounts and make sure you keep the balances as low as possible by making regular, monthly payments.

  • Don’t max out your credit card or overdraft limit

If your credit card is constantly maxed out, you have overextended yourself.

  • Late payments decrease your credit rating

Pay your accounts on or before their due date. This will increase your credit rating and reflect positively on your credit history. This applies to all accounts, from retail accounts, to credit cards, personal loans, bond repayments and car finance. Every overdue payment slowly chips away at your credit score, and will result in defaults, judgement and ultimately blacklistings.

  • Review your accounts constantly

If you have any mismanaged accounts with overdue amounts on them, make sure that you re-establish regular, timely payments on these accounts. This will slowly start to build up your credit rating again.

  • Don’t ignore legal letters

If you’ve received a legal letter from a creditor, address it immediately! This is vitally important. There is likely to be a mail backlog through the Post Office for some time, so the chances are your letter may have been sent a long time ago.

Download our checklist on how to improve your credit rating to help keep your credit record clean.

Download Checklist

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