CREDIT: THE GOOD, THE BAD, AND THE UGLY

In tough times, financial discipline when it comes to credit is more critical than ever

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THE COVID-19 pandemic has had a dramatic effect on the South African economy, which has left many people in debt. However, being responsible with credit can prevent people from living beyond their means, and can also be beneficial when wanting to apply for finance.

Eloise Boezak, head of customer experience at African Bank, says that many South Africans pay little attention to their credit score until it is too late. It is concerning to see that only 9% of the 25 million credit-active South Africans, access their credit report annually.

A credit score is a three-digit number created by a credit bureau to explain your credit behaviour, calculated using information received from credit and service providers. Using a formula, this number is calculated based on how well you pay your accounts.

Basically, good credit profiles are gained when you borrow money and pay it back regularly, on time, and for the full amount.

A credit report is a record of your credit history and payment behaviour that is maintained by credit bureaus. It is important that consumers look at the accuracy of their credit reports.

All consumers are entitled to a free credit report every 12 months from any credit bureau in South Africa.

During Money Smart Week South Africa (MSWSA), a financial literacy initiative held in March each year, the topic of credit and good credit history was addressed by several organisations and industry bodies in 2021. Go to https://mswsa.co.za/2021-event-videos/.

Credit and a growing economy