The information in your credit report is used by most credit and service providers as one of the factors when they develop their own credit risk score.
Your credit information along with your employment history, your income and affordability assessments as well as the type of credit for which you are applying, may determine if they extend credit to you.
It is important for consumers to know what information is on their credit report. Every South African consumer is entitled to one free credit report annually from all of the credit bureaux.
The information on your credit report is summarised in the form of a score. The credit report score itself is just a number.
Each credit bureau calculates a credit score for each credit active consumer using a complex formula that evaluates how you pay your bills, how much debt you carry and how all of that compares to other credit active consumers.
In effect, it reveals – in a single three digit number – what your credit report says about your management of your existing credit.
There are several factors that are considered in the calculation of your credit score. At TransUnion, the most important of these are:
Account payment history – how you manage your accounts and whether you do or do not pay the entire instalment amount on time.
Too much debt – how much you owe and how much of your available credit you're using.
Negative information – publicly available information in your credit record, such as bankruptcies and judgments, indicating you did not honour a particular debt obligation.
Length of credit history – how long each of your accounts has been open.
Account application and enquiry activity – within a short period of time, how many account applications you submitted and how many new accounts you opened.
The following steps can help you achieve healthier credit:
- Pay the amount due on every one of your accounts in full and on time, every time.
- Limit your utilisation of credit; manage your debts responsibly and avoid applying for too much credit.
- Check your credit reports – and your credit score – regularly.
Look for anything that does not seem right and dispute any inaccuracies. This will better safeguard you from identity theft, as well as paint the best picture of you in the eyes of the potential lender.
To get your free credit report from TransUnion, simply either phone the TransUnion call centre on 0861 482 482 and ask for it or visit www.mytransunion.co.za.
Tersia van Rooyen, Manager at TransUnion