fb

How to manage your credit score before buying a car

By  Mxolisi Mhlongo

You have just got that promotion or a new job and you want to buy a car but does your credit score allow?

Some will splash out and buy their pride and joy using cash but most people will have to consider applying for finance. This then brings up the matter of a credit report or fondly know as “ITC”.

What is a Credit Report?

A credit report is a document that shows your credit management, account management and your general financial status at any given time. It’s the document which financiers go to in their analysis of whether to give you finance or not. In that credit report, there is what you call a credit score, which is a rating of your credit responsibility. Your credit score takes into account your past credit behavior and, unfortunately, it cannot be changed overnight –  you need to work on it over time, months or even years.

Financial lenders also use the credit score on the report to ascertain how the financial transaction with you will look when it comes to things like interest rate and so on. The better your credit score, the more likely you are to not just get an approval but also better payment rates thus aiding your financial management. The worse your credit score, the most likelier you are to get a decline or financing terms that are not the best, further putting you in a bad situation. These are things that we rarely look at as we are focusing getting approval.

Car finance, finance, motoring

Generally, the higher the score on your credit report, the better your financial management is considered:

  • EXCELLENT: 767 – 999
  • GOOD: 681 – 766
  • FAVOURABLE: 614 – 680
  • AVERAGE: 583 – 613
  • BELOW AVERAGE: 527 – 582
  • UNFAVOURABLE: 487 – 526
  • POOR: 0 – 486

It’s important for each individual to continually monitor his or her credit score through accessing a credit report more often. By law, each person must get a free credit report once a year. By accessing your credit report, you can also see if there is misinformation on it that damages your credit score. Individuals in South Africa can challenge what he or she considers to be false or incorrect information on their credit report. But you won’t know this information unless you monitor your credit report.

In this article, we will look at how you can improve your credit score so you can have better financial terms on your next vehicle finance, home loan or credit card application. Here are the general tips on how to increase your credit score:

  • Pay on time: your ability to pay your accounts before due date shows you manage your finances well and banks are therefore more likely to offer you credit. Payment of accounts on time gives more points to your credit score. Accounts like DSTV, clothing accounts are generally taken for granted by consumers, rest assured; they make a big difference on your credit score.

 

  • Credit History: It’s all good buying things cash, avoiding interest and installments but when the time comes for you to make a credit purchase, you then realise you do not have a credit history. It’s called a credit score not a transaction score. Have credit accounts open and keep them open i.e. maintain them even if you don’t use them.

Having a credit card which you manage well counts in your favour compared to not having a credit card at all. Having the credit history of the one credit card you manage well shows you have financial resistance towards mismanagement i.e. Good debt. I once advised a lady who wanted to pay R100 000 cash for a car, to rather apply for finance and put R95 000 as deposit and then pay it off within 2 months. This transaction will not only be shown on her credit history but it will impact her credit score positively.

  • Credit Balances: Just above we encourage you to have a credit history but then again, you need to manage your credit accounts. Having multiple credit cards that you don’t use is unnecessary. Rather have one credit card that you manage effectively. The idea of spreading debt amongst credit cards can come back to bite you when applying for vehicle finance or a home loan.

 

  • Check your Credit Report frequently: It’s difficult to challenge credit information inaccuracy when you are waiting for that approval and you are anxious to get your new car or house. The process of challenging a credit report and having the information corrected does not happen overnight. The sooner (preferably way before a credit application) you realise there ’s misinformation on your credit report, the better you will be when you eventually make that credit application. Things like overdue accounts when you actually have paid on time (transactional error maybe) or paid-up accounts showing as still outstanding or in litigation, do negatively affect your credit score.

 

  • Credit applications: Having a credit application has a negative impact on your score. And this impact usually lasts for up to a year so it’s best to avoid making multiple credit applications over a long period. However, making credit applications to different banks for the same transaction (interest rate or better deal shopping) does not count as negative, it actually shows you know how to research for the best financial deal.

 

  • Correct installments: It’s utterly useless paying your bills on time but not paying the correct installment. This can either nullify your credit transaction or it will make a huge negative impact on your score. Pay the agreed amount every-time. Don’t fluctuate your installment amounts where one month you pay less and the next you double the installment only to miss out on the next one and pay less hoping the double installment will cover the default, no you must pay the right installment every-time.

 

    Don’t miss out on the latest local news, interviews and competitions.

    Don’t miss out on the latest local news, interviews and competitions.

    Receive the latest news

    Subscribe To Our Newsletter

    THE KAYA 959 APP NOW AVAILABLE

    DOWNLOAD YOURS NOW

    Copyright Notice

    1. COPYRIGHT

    1.1 The contents of this Website, including but not limited to its compilation and arrangement, is the exclusive property of Kaya 959, alternatively the suppliers of content to Kaya 959, and accordingly remain protected by South African and International Copyright and Trademark laws.

    1.2 Any person accessing this Website, may not, save for downloading one copy for their personal computers and solely for their private and non-commercial use :

    1.2.1 Copy, disseminate, distribute, advertise, publish, adapt, modify or in any way reproduce the contents of this website for commercial purposes, unless this notice and any disclaimer attached thereto is published in its entirety, or unless the permission of Kaya 959 is obtained in writing.

    Privacy Policy

    THIS PRIVACY STATEMENT FORMS PART OF KAYA 959’S TERMS OF USE POLICY. IF YOU DO NOT AGREE WITH ANY TERM OF THIS PRIVACY STATEMENT, YOU MUST CEASE YOUR ACCESS OF THIS WEBSITE IMMEDIATELY. 

    POPIA ActTo promote the protection of personal information processed by public and private bodies; to introduce certain conditions so as to establish minimum requirements for the processing of personal information; to provide for the establishment of an Information Regulator to exercise certain powers and to perform certain duties and functions in terms of this Act and the Promotion of Access to Information Act, 2000; to provide for the issuing of codes of conduct; to provide for the rights of persons regarding unsolicited electronic communications and automated decision making; to regulate the flow of personal information across the borders of the Republic; and to provide for matters connected therewith.

    RECOGNISING THAT—

    • section 14 of the Constitution of the Republic of South Africa, 1996, provides that everyone has the right to privacy;
    • the right to privacy includes a right to protection against the unlawful collection, retention, dissemination and use of personal information;
    • the State must respect, protect, promote and fulfil the rights in the Bill of Rights;

    AND BEARING IN MIND THAT—

    • consonant with the constitutional values of democracy and openness, the need for economic and social progress, within the framework of the information society, requires the removal of unnecessary impediments to the free flow of information, including personal information;

    AND IN ORDER TO—

    • regulate, in harmony with international standards, the processing of personal information by public and private bodies in a manner that gives effect to the right to privacy subject to justifiable limitations that are aimed at protecting other rights and important interests,
    1. Definitions and Interpretation

    1.1.“Personal Information” means information relating to an identifiable, living, natural person and where it is applicable, identifiable, existing juristic person, including all information as defined in the Protection of Personal Information Act 4 of 2013. 

    1.2  Parliament assented to POPIA on 19 November 2013. The commencement date of section 1Part A of Chapter 5section 112 and section 113 was 11 April 2014. The commencement date of the other sections was 1 July 2020 (with the exception of section 110 and 114(4). The President of South Africa has proclaimed the POPI commencement date to be 1 July 2020.

     
    1.3. “Processing” means the creation, generation, communication, storage, destruction of personal information as more fully defined in the Protection of Personal Information Act 4 of 2013.  

    1.4. “You” or the “user” means any person who accesses and browses this website for any purpose. 

    1.4. “Website” means the website of the KAYA 959 at URL www.kaya959.co.za or such other URL as KAYA 959 may choose from time to time.   

    1. Status and Amendments

    2.1. KAYA 959 respects your privacy. This privacy policy statement sets out KAYA 959’s information gathering and dissemination practices in respect of the Website. 

    2.2. This Privacy Policy governs the processing of personal information provided to KAYA 959 through your use of the Website. 

    2.3. Please note that, due to legal and other developments, KAYA 959 may amend these terms and conditions from time to time.  

    1. Processing of Personal Information

    3.1. By providing your personal information to KAYA 959 you acknowledge that it has been collected directly from you and consent to its processing by KAYA 959. 

    3.2. Where you submit Personal Information (such as name, address, telephone number and email address) via the website (e.g. through completing any online form) the following principles are observed in the processing of that information: 

    3.2.1. KAYA 959 will only collect personal information for a purpose consistent with the purpose for which it is required. The specific purpose for which information is 
    collected will be apparent from the context in which it is requested. 

    3.2.2. KAYA 959 will only process personal information in a manner that is adequate, relevant and not excessive in the context of the purpose for which it is processed. 

    3.2.3. Personal information will only be processed for a purpose compatible with that for which it was collected, unless you have agreed to an alternative purpose in writing or KAYA 959 is permitted in terms of national legislation of general application dealing primarily with the protection of personal information. 

    3.2.4. KAYA 959 will keep records of all personal Information collected and the specific purpose for which it was collected for a period of 1 (one) year from the date on which it was last used. 

    3.2.5. KAYA 959 will not disclose any personal information relating to you to any third party unless your prior written agreement is obtained or KAYA 959 is required to do so by law. 

    3.2.6. If personal information is released with your consent KAYA 959 will retain a record of the information released, the third party to which it was released, the reason for the release and the date of release, for a period of 1 (one) year from the date on which it was last used. 

    3.2.7. KAYA 959 will destroy or delete any personal information that is no longer needed by KAYA 959 for the purpose it was initially collected, or subsequently processed. 

    3.3. Note that, as permitted by the Electronic Communications and Transactions Act 25 of 2002, KAYA 959 may use personal information collected to compile profiles for statistical purposes. No information contained in the profiles or statistics will be able to be linked to any specific user.    

    1. Collection of anonymous data

    4.1. KAYA 959 may use standard technology to collect information about the use of this website. This technology is not able to identify individual users but simply allows KAYA 959 to collect statistics. 

    4.2. KAYA 959 may utilise temporary or session cookies to keep track of users’ browsing habits. A cookie is a small file that is placed on your hard drive in order to keep a record of your interaction with this website and facilitate user convenience. 

    4.2.1. Cookies by themselves will not be used to identify users personally but may be used to compile identified statistics relating to use of services offered or to provide KAYA 959 with feedback on the performance of this website. 

    4.2.2. The following classes of information may be collected in respect of users who have enabled cookies: 

    4.2.2.1. The browser software used; 

    4.2.2.2. IP address; 

    4.2.2.3. Date and time of activities while visiting the website; 

    4.2.2.4. URLs of internal pages visited; and 

    4.2.2.5. referrers. 

    4.3. If you do not wish cookies to be employed to customize your interaction with this website it is possible to alter the manner in which your browser handles cookies. Please note that, if this is done, certain services on this website may not be available. 

    1. Security

    5.1. KAYA 959 takes reasonable measures to ensure the security and integrity of information submitted to or collected by this website, but cannot under any circumstances be held liable for any loss or other damage sustained by you as a result of unlawful access to or dissemination of any personal information by a third party. 

    1. Links to other websites

    6.1. KAYA 959 has no control over and accepts no responsibility for the privacy practices of any third party websites to which hyperlinks may have been provided and KAYA 959 strongly recommends that you review the privacy policy of any website you visit before using it further. 

    1. Queries

    7.1. If you have any queries about this privacy policy please contact us by emailing [email protected] 

    Competition Terms and Conditions

    • The competitions are open to all persons over the age of 18 years; except directors, partners, employees, agents, service providers, and consultants of Kaya 959, the sponsor and all its subsidiaries and its holding company, if any, as well as all spouses, life partners, parents, children, siblings, business partners and associates of such persons.

    • The outcome of the competition is subject to the decision of the judge/presenter, whose decision is final and no negotiation will be entered into thereafter. Neither Kaya 959, sponsors nor their agents will be held responsible or answerable to any dispute arising from the competition or prize awards.

    • Participants/listeners enter or take part in competitions at their own risk and Kaya 959 bears no responsibility for any loss, damage or harm suffered as a result of participation in any of Kaya 959 competition.

    • One listener is entitled to winning one prize in a period of 3 months. Kaya 959 reserves the right not to award a prize if the listener has won a prize prior during the 3 month window period. This also applies to listeners who provide family or friend’s contact details.

    • Kaya 959 reserves the right to redistribute all unclaimed prizes if not claimed after 3 months after being given away On Air or on the website.

    • Prizes are not transferable and may not be exchanged for cash.

    • Finalists will forfeit their participation in the competition if they fail to attend the draws.

    • The competition will run during the period advertised on Kaya 959; entries received outside of the competition period will not be considered for the competition draw.

    • Kaya 959 and their sponsors reserve the right to cancel, modify or amend the competition at any time if deemed necessary in their opinion, or if circumstances arise outside of their control.

    • By entering the competition, entrants agree to accept these rules and to be bound by them.