Credit Scores: an Introduction

A credit score allows you to make debt, get a home loan or a cellphone contract.

Today, when we want to get a home loan, take out a mobile phone contract or rent a place, we have the same situation. The other party demand the truth (and remind us) about who we are.

Are we credible? Can we repay our debt? Do we have the means to repay the monies we owe?

The way this gets measured in South Africa is through a credit record.

Why measure?

I know how dare they who do they think they are measuring us?!

Heres the issue that explains why this system was developed:

I had a friend who started a business quite a few years ago. They received a loan and overdraft facility from the bank manager as you did in those days. The business was doing exceptionally well. It did so well, that the bank manager wanted a slice of the pie. He called my friend and demanded that the loan and overdraft be repaid by close of business the next day.

His business went bankrupt overnight. 

To combat favouritism and nepotism (which we so love to complain about), magical people that have degrees created a system to measure if someone will repay the money. 

By doing so lenders could measure if you will repay a loan.

How do I build a good credit record?

The easiest way to get a good credit score is to make debt and pay it back even if its immediately.

You can get a credit card or a store card and buy something on it. You can then immediately pay the money back. 

Many companies specialise in lifting your credit record. They have legal ways and connections in the right places to up your score. A simple google will help with this.