A credit score is a very powerful piece of information. It is a single number, linked to your personal South African ID number, which is quite possibly the single most important number when it comes to how businesses will view you financially. It is also completely objective and impossible to manipulate. And because of all this, almost every business that needs to decide if they want to work with you or not, will use your credit score as a guide.

Your credit score is a single number (usually out of 1000) linked to your ID number, which represents how likely you are to repay your credit accounts. This is calculated by various credit bureaus and is often referred to as your ‘credit worthiness’. A high number (say anything above 600 out of 1000) means your credit worthiness is considered good. And a low number (say below 400 out of 1000) means your credit worthiness is considered bad.

Here are some examples of how your credit score can be used:

  • A loan provider could decline you for a loan or may offer you a different interest rate based on your score. Typically, if you have a better credit score, you’ll be offered lower interest rates.
  • A car insurance company may offer you a better deal on insurance if you have a good credit score. They may also choose to not insure you at all if your score is bad.
  • A recruitment company may offer you a job if you have a good score. Bad score = no job.
  • A landlord may decide not to let you rent their property if you have a bad credit score.
  • A cellphone company may not give you a cellphone contract if you have a bad credit score.
  • A retailer (like Edgars, Mr Price or Foschini) will not give you a store card if you have a bad credit score.

The list goes on and on, but the point is that practically every aspect of your financial life is governed by your credit score.

The bottom line is that if you have a good credit score, you can have a good financial life. If you have a bad credit score, it is likely that you will battle financially. You may not be able to get that job you want, or buy the car you really need, or rent the flat you’ve set your sights on. You may not even be able to buy airtime or food on credit when you really need those things.

You need to think of your credit score as your own personal financial asset – how you treat your credit score will directly affect how good your financial life is.

At MoneyShop we’ve tried to make it really easy for every South African to access their credit score.  We’ve also made it completely free – click here to view yours now.

If you’ve read this far, then you’re taking your first steps to start working on your financial fitness – so well done! And don’t despair if you currently don’t have a great credit score, as there’s lots you can do to improve it. Over the next few weeks we’ll be sharing tips and tricks on how to improve your score and start to become financially fit, so watch this space.