What is a Credit Score and How to Check It?

A credit score is something we often hear about, but what is it really? A credit score is often spoken about and used as a metric to judge the risk of our customer. This number can make a huge difference in your ability to negotiate credit and get better interest rates, but what is a credit score and what affects this number?

Your credit score is designed to show you your credit history and the strength of your credit profile in a numerical form.

What factors affect your credit score and how can you increase a credit score?

What Factors Make Up Your Credit Score?

In South Africa, the top two credit scoring agencies are TransUnion and Experian. While they can differ slightly in their scores and scoring methods, they both look at similar metrics. These metrics are used to produce your credit score. Improving these metrics will help to improve your credit score which can help you to secure better interest rates.
These are the main metrics used to calculate your credit score:

  • Court Judgements – A court judgment is when a court issues an instruction for you to pay your outstanding debt.
  • Defaults – A default is when you fail to pay or fulfil a monthly debt commitment.
    Length of Credit History – The longer you have had credit, the better for your credit score.
  • How Much Debt You Have – The amount of debt you have affects your affordability and credit score.
  • Credit Utilization – How much credit available vs how much credit you are using is called credit utilization.
  • Enquiries – Everytime you apply for credit, the creditor will check your credit score through an enquiry.

How to Check Your Credit Score?

Many of the credit regulators and credit scoring agencies advise checking your credit score at least once a year. This is to help combat fraudulent activity on your profile and to ensure you are keeping your credit healthy. There are several places you can check your credit score for free in South Africa.

Here are some of the common places:

TransUnion – TransUnion is one of the top credit scoring agencies in South Africa and allows South Africans to get a free credit report once per year.

Experian – Experian is another one of South Africa’s top rating agencies. Experian similarly allows you to check your credit score once a year.

Your Bank – Many banks offer a credit score or indicator for their users. While this is not a full report it can give you a good indicator of your progress.

Bond OptimiserBond Optimiser offers its clients free credit reports.

While a credit score may seem like a confusing number, it is simple to understand when you break it down. It all comes down to how you have managed your credit in the past and how you are currently managing debt.