Regular checks help you keep a tab on your credit health

It pays to maintain your credit health, but how do you check your credit health? And what does your credit score mean?

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The three digits that represent your credit score reflect some of the most important financial information about you, but many do not know their score or how to manage or improve it.

Your credit score is an indicator of financial reliability and lenders use it to determine whether you qualify for credit or other financial products and the interest you will be charged, Gavyn Letley, product head at loan provider, DirectAxis, says.

"A strong credit score creates opportunities, while a poor one limits them and increases borrowing costs. Ascore of over 650 gives you an 85% chance of getting a home loan or vehicle finance.

"A score of 700+ can mean you pay prime or below-prime interest rates, while a poor credit score could mean paying prime +3%, which considerably adds to the cost of a 20-year home loan."

However, according to credit bureau TransUnion, the average credit score in South Africa this year is 612, with only 42% of consumers having a 'Good' to 'Excellent' credit rating while 41% of credit-active South Africans are considered high-risk borrowers.

Letley says it is not just credit providers who check your credit health before deciding if and how to do business with you.