Having credit is sometimes unavoidable. If you’re thinking of buying a car, taking out a bond having a bond for your dream home or taking out a personal loan then you’ll struggle to do so without having a good credit record.
Emergencies can occur at any time, and sometimes, we are not fully prepared for it. With South Africa’s downgrade to junk status, the increasing food and fuel prices and more companies facing the risk of closing down, ensuring your credit score does not suffer is more important now than ever as it could have long term cost implications for you.
In a world where it is easy to be blacklisted, how does one establish a good credit rating?
Here are tips to help you ensure you build a good credit record:
- Settle any outstanding debt.
Treat debt as an illness. Depending on the nature of the infection, it can take a long time to get rid of completely, however treatment should be done regularly. If you prefer to settle outstanding debt with isolated payments, consider a debt consolidation loan.
- Never miss a payment.
Ensure that you pay all bills such as clothing accounts, water and electricity, car and home insurance and credit cards consistently every month. Sort out your essentials first before you choose to go on a shopping spree or buy something you don’t really need. Also, make sure that the payments for them are made on or before their respective deadlines. If you’re paying your funeral plan by debit order, ensure that you have enough money in your account as the deadline approaches.
- Only use your credit card when you REALLY have to.
Having a credit card can be beneficial and tricky at the same time. If you’re an excessive spender and you know you can’t afford to pay your balance, then only use your credit card when you’re in a better financial situation. For instance, if your medical aid does not cover all costs and you do not have gap cover, then you can pay with your credit card. However, if you have the means to pay the remaining costs on your credit card, make sure you do not pay the amount late and try to maintain a small overdraft.
Establishing a good credit record is not exactly difficult. Always ensure that you do not spend more than you can afford and remember to save money as often as you can.