We’ve all heard the term credit history before but what is it and what does it mean for the South African consumer? We break it down into a simple and easy to understand the process.
What is a credit history?
A credit history is a record of a borrower’s responsible repayment of debts. A credit report is a record of the borrower’s credit history from a number of sources, including banks, credit card companies, collection agencies, and governments.
Building a better credit history
When held down by debt, consumers may not consider improving their credit history, due to other immediate concerns. However, for clients with money troubles, rebuilding a credit history is essential to getting new credit with attractive terms.
The credit rebuilding process is quite simple:
- Get small amounts of new credit and repay the debt on time. For example, get a credit card, use it to purchase some goods or services needed to pay off the card balance as according to your agreement with the card issuer
- Borrow a small amount of money from a bank and pay off the loan according to the terms of the agreement with the lender
- Add new positive information to your credit history
Negative information in a credit history gradually begins to disappear, as most damaging credit record information can be reported for only seven years and six months. As time passes, your credit history will gradually contain more positive than negative information, assuming that you manage your finances responsibly.
Potential consequences of a negative credit history:
- Won’t qualify for a credit card with a low-interest rate
- Trouble borrowing a significant amount of money from the bank
- Credit record reviewing, a part of the job application process, may impact the employers hiring decision
- Denied a promotion with current employer
- Life insurance companies may enforce penalties by charging a higher premium or refusing to sell more insurance
- Landlords may refuse rental
- Security clearances or certain types of professional licenses may be omitted.
Should you have mountains of debt and thinking you will never be granted access to credit again, or you are blacklisted, then speak to us about the Debt review process and how we can get you back on the right path to becoming debt free and have access to credit in the future.
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