Which gender best manages their debt?

Since the start of the pandemic, many South Africans have struggled to keep up with their debt obligations. A recent report by Experian details, among other things, how men and women have handled this change - and, it turns out, there are differences.

We discover these, and we look at some tips that everyone can use to improve their debt management.

Tip: The first step to improving your credit score is to know what it is – join CreditSav.

Women have defaulted less often than men

According to a 2021 report by Experian South Africa, which focuses on the state of the economy following the pandemic, 51% of credit-active consumers are women, while 49% are men.

Except for home loans, the report points out that men are more likely to default on their credit agreements – but only marginally more so than women.

“Female consumers are typically employed in industries that have been impacted more severely by lockdown levels and looting,” says the report. On the other hand, it states that males pose a higher credit risk than females do – possibly because their credit utilisation is greater.

According to the report, women are more likely to have retail accounts, while men are more likely to have credit cards and personal loans.

In a press release issued last August, Jaco van Jaarsveldt, chief decision analytics officer at Experian South Africa, said that women also score lower on the Consumer Default Index (CDI) than the total South African credit market.

“This might be because women have less exposure in the credit market, and thus have more manageable monthly debt commitments, but it might also point towards them putting a higher priority on meeting their debt obligations,” says Van Jaarsveldt.

Raise your credit score by improving your debt management

Regardless of your gender, you can always improve the way you manage your debt. This will ultimately increase your credit score, which means you’ll qualify for the credit you need in future. Sbusiso Kumalo, chief marketing officer at African Bank, recommends four actions you can take to achieve this:

• Limit your credit exposure. If you have a few lines of credit, you should consider consolidating your accounts into a single account, allowing you to make a single monthly payment. While this usually extends your payment period, it also reduces your overall monthly instalments.
• Pay on time. If your payments aren’t already automated, you can set up debit orders so you don’t forget to meet your monthly instalments. This is particularly important when it comes to repayments on larger accounts, such as vehicle finance and home loan repayments.
• Make sure your data is correct. Check that your closed accounts reflect as closed, that your marital status is correct, and that your address is accurate.
• Reach out to your lender. If you think you won’t be able to make a payment, reach out to your lender and alert them. Many lenders will try to assist you with an alternative solution.

You can keep track of how well you’re managing your debt by regularly viewing your credit report. This will show you whether you’re meeting all your credit agreements, and offer insights into which actions you can take to further improve your debt management.

“Data from TransUnion shows that just 9% of the 25 million credit-active South Africans actually access their credit report annually,” says Kumalo. “This is concerning.”

You are allowed to request one free credit report annually from each of the credit bureaus, or you can sign up to an intermediary platform, such as CreditSav, where you can view your report as often as you wish.