A lot of people in South Africa are suffering from having a bad credit profile, and some are not sure how they got to that position.
Managing your credit history is important to give you access to things like credit, home loans, and so on.
Your credit history will also determine how much credit you may end up qualifying for and the repayment terms you may end up paying.
Here are a few tips that will help you get and maintain a good credit profile.
Live within your means
This is the main culprit with so many people who have bad credit, because most of them spend a lot more than they earn.
The first thing you need to do is list your income and expenses and see if you are spending on your needs or wants.
Focus on spending on your needs , such as food, housing , transport, education , home bond, and cut back on some of those unnecessary expenses, such as entertainment and accounts.
Limit your wants
Things like expensive restaurant outings, memberships, accounts can make you have more expenses than you can afford.
Get rid of some of the desires you don’t need right away, such as cell phone accounts, gym memberships, or anything else you might not be using.
Store cards also need to be better managed, which means that you can only take whatever you need to use a store card and restrict your use of it.
Pay all your debts in time
Many people have a habit of not paying their debts, and they have to wait until they get a summons to pay their bills.
Prioritize and pay your bills in order of importance, e.g. start with your bond or bills of accommodation, and work your way down to the smallest bill.
In order to have a good credit profile, try your level best to pay your bills in full and in time, and if for whatever reason you find yourself unable to pay, get in touch with your creditors much earlier and let them know about your situation before they come to look for you.
Stick to your budget
It’s always tempting to go beyond your budget, especially when you are dealing with wants.
Maybe it’s the latest iPhone or you just want to try out a new gadget that’s out – it’s always best to save or plan for such things.
Your budget allows you to better manage your finances, if you didn’t put it on your budget don’t take it.
Don’t take credit you can’t afford
This is self-explanatory, if you can’t afford to repay your debts, it will unfortunately appear on your credit profile.
This will have negative long-term results on your profile, and some financial institutions may turn your applications down due to your perceived risk profile.