Credit Talk – How much credit is enough?
A highly important part of financial freedom, something every citizen should be familiar with, we look at what is a good credit score in South Africa. Not only an indication of your level of responsibility regarding your finances, a credit score also shows creditors how likely you are to pay them back and what risk factors are included in giving you credit. So, what is a good credit score?
Your credit score is an amount that can range between 330 and 850, the higher the score, the less risk you represent to creditors. With an excellent score there is more chance you will receive lower rates and special deals, while with a poor score there is a much greater chance that you will not qualify for credit or loans. If your credit score has dipped low, perhaps it is time to rebuild it before looking for more credit.
With more stringent policies and review processes coming into being in recent year, creditors have skewed their risk in favour of the higher levels of the score brackets. These days a score of 680 is seen as average whereas a few years back it was the goal score for many. What was before considered a great position to be in, is now seen as the expected level for an average credit seeker. With the current divisions, an ideal credit score in South Africa is above 720. Seen as a very good score on the breakdown, this is the level of risk that creditors prefer to take on since the global economic crisis in our recent history.
What is a good credit score in South Africa? Not only taking into account your credit history, your score and credit worthiness is valued through your payment history, amounts owed, length of credit history, types of credit used and the amount of new credit requested. A long term element of finance that needs to be nurtured and built with care, credit can be both a ladder and a slide when trying to climb in the financial world.
