The importance of your Credit Score

A credit score in an indicator to lenders and other parties (for example, your employer) of a prospective client’s credit worthiness. In principle, the higher the credit score, the better the perceived credit risk and the more likely it is that lenders will extend credit to at favourable terms. Conversely, if a poor credit score is calculated, a credit application may be declined, or credit may be extended at higher interest rates and at less favourable terms and conditions.

Maintaining a good credit record may provide easier access to credit. Yet, it is important not to become financially overextended by accepting credit that is provided on generous terms. Financial commitments must be carefully planned. Current income and expenditure should be reviewed and then the decision should be taken about whether the credit offered is really required to meet a particular need.

“How-to” to maintain a good credit score:

  • Bills should be paid on time, every time.
  • Don’t be tempted by easy credit.
  • If you are unable to meet your obligations it is important to contact your credit provider to discuss repayment options.
  • It is also important to protect yourself against identity fraud. Criminals that have gained access to your personal information may use it to obtain credit fraudulently.
  • Although credit scores change from time-to-time and may even improve with good financial conduct, certain types of information, such as default listings and judgments will remain on record for a period of time and may even limit access to new credit facilities.

You can contact a credit bureau to access your credit record, the information is usually provided at a minimum cost.