Learn everything about credit scores in South Africa, including how to check your score, what a good credit score is, and practical tips to improve it.
15 November 2024 · Fiona Zerbst
Do you know what your credit score is, and why it matters?
In this simple and easy-to-follow guide, we answer the most common questions about credit scores, and explain what your score means for you.
Tip: Stay informed about your credit score. Join JustMoney to get free, immediate access.
A credit score is a three-digit number that provides a snapshot of your creditworthiness.
It gives lenders insight into your financial behaviour, and helps them determine whether you may be a risky borrower.
Credit bureaus calculate your credit score by reviewing financial data from credit providers, which they are legally obliged to submit to the South African Credit and Risk Reporting Association (SACRRA).
Different bureaus interpret data using different scoring models. Although the information generally comes from the same sources (credit providers, retailers, and so on), some bureaus also use additional data sources.
Credit providers offer financial products on the assumption that a higher credit score indicates a greater likelihood that you’ll settle your debts on time.
However, a score of 600 at one credit bureau is not necessarily equivalent to the same score at another. While one credit bureau could deem your score to be “okay”, another might rate it as “good”. Further, your score indicates relative risk – that is, how you stack up against your peers.
The following guide gives an example of credit-scoring bands. Each category indicates how confident credit providers might be in your ability to manage your credit.
901 to 999: Excellent
851 to 900: Good
801 to 850: Okay
601 to 800: Needs work
3 to 600: Not good
0 or 1 to 2: Not enough information to score
You will need a good credit score to qualify for a loan, and to attain preferential interest rates and other benefits.
Under the auspices of the National Credit Act, you’re entitled to one free credit report a year from any registered credit bureau, including South Africa’s four main bureaus; Experian, TransUnion, VeriCred Credit Bureau (VCCB), and Xpert Decision Systems (XDS).
Here’s a list of credit bureaus registered with the National Credit Regulator.
Some online platforms allow you to check your credit score more frequently, for free, once you’ve registered. Some banks and credit card companies also offer free credit score checks as part of their services.
Finally, there are companies that offer credit-monitoring services for a fee, providing you with regular updates and alerts.
Check your credit score for free by signing up with JustMoney.
Credit scores are an essential tool that lenders use to assess your creditworthiness and eligibility for loans, credit cards, and other financial products, such as insurance.
A good credit score brings financial opportunities, while a poor score limits your options.
Your credit score is vital for securing:
Showing that you manage your credit well can improve your financial standing, so it’s essential to maintain a good credit score or take steps to improve it, if it's poor.
Using credit wisely can mean the difference between getting ahead or being left behind financially.
If you’ve never applied or qualified for credit and you don’t have a payment history, you may have a credit score of zero. However, you can start building your credit profile at any time, as long as you’re 18 years of age, or older.
Consider opening a retail store account, buying something small, and paying it off diligently over a few months. Servicing your debts reliably is vital, as retailers will inform credit bureaus of your payment behaviour.
However, it’s important to only open accounts with reputable retailers, or your payment history may not be reported to credit bureaus.
Once you’ve built up a credit record, lenders will use it to determine whether you’re a reliable borrower. They’ll then calculate an appropriate interest rate and credit limit.
It may take time to improve your credit score as there is no quick fix. The lower your score is to start with, the longer it will take to see improvements.
However, if you use credit responsibly, you’ll start to see a change. It takes discipline to maintain good financial habits, so take care to consistently manage your credit well.
Also, be sure to check your credit score frequently. This will help you spot errors and issues, and motivate you to stay on track.
Various factors influence your credit score, with each credit bureau weighing each factor slightly differently.
These include your payment history, credit utilisation (how much credit you use compared to your total available credit), the length of your credit history, and whether you have different types of credit, such as a home loan, personal loan, and credit card.
Avoid opening new credit accounts if you’re aiming to build or improve your credit score, as this may temporarily lower your score.
You should also know which factors do not impact your credit score. For example, checking your credit report regularly, and your income level, do not affect your score.
Before looking at ways to improve your credit score, you must first understand what could damage it. Here’s a breakdown:
Your payment history is the most significant factor, as consistent, timely payments show you manage credit responsibly. This has a positive impact on your score. It can be challenging to keep track of all your payments, so consider automating them to make sure you don’t miss any.
There are two types of enquiries: “soft” and “hard” enquiries.
A soft enquiry occurs when you check your own credit report, or have it checked by an insurance company or your future employer, for example. Your permission is not required for a soft enquiry.
A hard enquiry, by contrast, involves a credit check from a financial institution, such as a bank, when you apply for a loan or line of credit. Hard enquiries can negatively affect your credit score and are kept on your credit report for two years.
If possible, try to avoid more than two hard enquiries a year.
Credit providers look for long-term stability when lending. Having a credit history of more than five years’ duration is considered good, so the sooner you open your first account, the better.
However, having several new accounts that are less than a year old is considered a red flag.
If you have too much debt and live beyond your means, you might not make enough money to cover both your living costs and your debts.
This affects your debt-to-income ratio, which is calculated by dividing your total recurring monthly debt by your gross monthly income.
Here’s an example of how to work it out: R14,500 (rent, car loan, student loan, credit card payments) / R30,000 (income) x 100% = 48.33%.
The above calculation indicates that 48.33% of your monthly income goes towards paying off debt. You should ideally keep your ratio at around 36%, with 28% or less allocated to bond repayments.
If you continuously default on your payments, your creditors may apply for a court judgement against you to recover monies owed. This can remain on your credit record for five years.
Here are the key factors that will positively influence your credit score:
It’s vital to check your credit report regularly for discrepancies or errors. If you find any, report them immediately to the relevant credit bureau or platform. An investigation usually takes 20 business days to complete.
The following outlines the dispute process with the main credit bureaus, and the JustMoney platform.
TransUnion: Visit www.transunion.co.za, click on “Member login” in the top right-hand corner of the page, log in (or register if you haven’t yet done so), and view your report on the TransUnion dashboard. If you disagree with the information, click the “Dispute/Query” button and follow the prompts. Track your dispute progress by clicking the “Dispute summary” tab on the dashboard. You can also call 0861 484 482 and select option 2 to log a dispute, or email SECsupport@transunion.com.
Experian: Register and log in at www.mycreditcheck.co.za to submit a dispute, or chat to ED, a chatbot that can provide information about the process. For queries, call 0861 10 56 65 or email EZA.consumer@experian.com.
VCCB: Visit www.vccb.co.za, click on “Log a Dispute” in the menu at the top of the page and follow the prompts, or contact the call centre on 087 150 3601/087 803 4798.
XDS: Visit www.xds.co.za, click on the “For me” tab in the menu at the top of the page, then navigate to “What if my personal information is incorrect?”. This directs you to a dispute form you can download. Once you have completed the form, email it to dispute@xds.co.za. You can also contact XDS at 011 645 9100.
JustMoney: Visit www.justmoney.co.za, click “Join/Log in”, and create an account if you haven’t already done so. Once logged in, click on the “Credit Report” tab in the top menu, then navigate to the button at the bottom of the page that notes “you can log a dispute here”.
Be cautious when logging disputes. If your dispute is found to be invalid, your credit record will be left as is, and the false dispute will be noted on your report.
If you do log a dispute but you’re unsatisfied with its outcome, you can contact the National Financial Ombudsman or the National Credit Regulator.
The National Credit Regulator (NCR), established under auspices of the National Credit Act No 34 of 2005, is responsible for the regulation of the South African credit industry. This includes preventing creditors from taking advantage of consumers.
South African adults have the right to apply for credit, but credit providers also have the right to reject an application if they believe there’s a risk of default. However, this doesn’t mean they are allowed to discriminate against consumers when drawing up a credit agreement.
Credit providers may be asked to explain in writing why a consumer was refused credit, offered a lower credit bracket, or denied a credit card renewal, for example. However, they’re within their rights not to extend credit to minors or adults who don’t have legal capacity.
The industry no longer “blacklists” individuals, says Ryan Smith, head of analytics at XDS. “Both positive and negative information about consumers is shared, so lenders can make the best possible decision and provide consumers with the best products for which they qualify,” he explains.
If you believe you’ve been discriminated against, contact the National Credit Regulator, which will refer your complaint to the Equality Court if it appears to be valid.
When you apply for credit, you may be required to take out credit life cover. This condition will be included in the terms and conditions of your contract with your credit provider.
However, many South Africans are unaware that they’re paying for this cover, so may miss out on its benefits.
Credit life cover steps in to cover your monthly instalments if you become disabled, face a serious illness, are retrenched, or pass away – protecting you, your creditors, and your nominated beneficiaries from unforeseeable circumstances.
If you’re unable to pay your account, contact your credit provider and ask if your instalments can be adjusted. Alternatively, if you’re overindebted, meaning you have more debt than you can afford to pay, consider applying for debt counselling to help protect your credit score. Credit bureaus aren’t allowed to add any additional negative information to your credit profile while you’re under debt review.
The sooner you address your debt, the sooner you can start rebuilding your credit score.
You can view your credit score and report at any time without triggering any effect on your score, says Shashika Dhurup, director of product management at TransUnion.
This sort of check is known as a “soft” enquiry and has no impact on your score. However, a “hard enquiry”, for example, when a lender checks your report when you apply for a loan, can affect your score.
Closing an old account can hurt your credit score, by lowering the average age of your credit accounts. This is because having longstanding accounts indicates reliability. It can also reduce your total available credit, which may increase the ratio of credit you use compared to your available credit; and, as a result, negatively affect your score.
Dhurup notes that positive credit behaviour also has a significant influence on your credit score.
Paying your bills on time, avoiding running up excessive debt, and keeping your credit utilisation ratio low, all contribute to a healthy credit score. Overall, your best strategy is to cultivate good long-term financial habits.
Having a good credit score may mean that you’re eligible for a personal loan. This can be a great help if you face unexpected expenses.
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