When applying for credit, have you ever questioned why you’re asked for your name, proof of employment and marital status?

Well, believe it or not, this information is used to build your credit profile, which is continuously maintained by South Africa’s credit bureaus. It provides a breakdown of where you live, where you work and (more importantly) how you manage your debt.

The benefits of knowing your credit score

Understanding information on your credit report may seem like a daunting task, and for this reason, many consumers avoid checking their reports regularly. However, knowing your credit status is so imperative. Here are the following benefits:

  • It allows you to keep track of all payments made on monthly basis.
  • You can check if your personal information is up to date.
  • You’re able to view any negative listings and have the opportunity to remedy the situation before applying for future credit.
  • If you received tips and advice from a credit coach, you can track the improvements to your score.
  • It enables you to check whether any accounts that you closed reflect as open on your report or vice versa.
  • Your credit profile has information which helps the bank determine your financial stability.
  • You can ensure that nobody is using your identity fraudulently.
  • You know exactly what information is listed on your credit report.

A good credit score is of paramount importance, as credit providers will use this information when deciding whether or not to grant you a home loan, vehicle financing, or any other form of credit. Your chance to obtain credit could therefore be hampered by a poor credit score.

By law, South African citizens are entitled to one free credit report each year from each credit bureau. However, it is recommended that you carefully examine your credit report once a month, so as to monitor your financial standing as well as to identify and combat fraudulent activity.