Take your credit score to the next level

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As the economic crisis caused by the Covid-19 pandemic has left 85% of South Africans in need of financial assistance, recent data has shown South Africa’s credit scores are rising after the lockdown national which started in March of this year.

Light at the end of the tunnel shows that 51% of South Africans now have a higher credit rating than before the lockdown. Short-term loan providers attribute the improvement in credit scores to a temporary reduction in defaults due to the payment holidays offered to consumers at the start of the foreclosure.

Get help from a financial coach

Ayanda Ndimande, Retail Credit Business Development Manager at Sanlam, explains that since one would rely on a fitness trainer to advise them on the best fitness routines for them and a life coach for mentoring, so have a financial coach to guide them with their finances.

So how can you take your credit score to the next level? Ndimande advises consumers to do this with the help of a financial coach.

“A financial coach works with you on an ongoing basis, focusing on the ‘here and now’ by helping you better understand your financial profile to become and stay financially secure. This includes understanding your specific financial challenges and the steps that need to be taken to improve your credit score. If you have a view and an understanding of both sides of your personal bottom line, this is the first step to getting financially fit, ”says Ndimande. A financial planner, on the other hand, helps you plan your portfolio holistically to ensure you have adequate coverage for your life circumstances.

Calculating your credit score

If you want to understand how your credit score is calculated, why credit providers use this score to decide if you are a good or a bad credit risk, and how a good score can help you negotiate interest rates, it is best to hire a financial coach. on board.

Below, Ndimande explains how your credit score is calculated:

How you pay your credit obligations both now and historically. This represents 35% of the score. A missed or late payment negatively affects the score.

How much and how often you use the credit made available to you. It takes 30% of the calculation and is based on balances owed on loans and credit cards.

The length of time you have actively used the credit. The longer the credit history and on-time payment, the better the score. It’s good to have debt that is well managed and contracted for good reasons. This contributes 15% of the overall rating.

The type of credit available on all credit products contributes 10%. A mix of long and short term credit can be beneficial.

Manage your credit

The most important aspects of credit are payment performance, credit management, and proper use of credit.

Ndimande advises consumers to use Sanlam’s credit dashboard to check their credit and wellness score, which also provides the assistance of a free credit management coach to guide you on the right steps to take. take to improve and maintain a good credit score.

Improving your financial well-being is just as important as maintaining good general well-being. Consumers can do this by being mindful of their finances every day so that they know what they are spending and how much they are saving. “With the help of a financial coach, you don’t have to do it yourself,” concludes Ndimande.

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