By Katlego Sekhu
Photo By Pixabay
You may be one of those people who buy most things on cash, nonetheless, debt is sometimes hard to evade as you might need credit to afford things like a home.
Before you can be afforded credit, banks or other financial institutions need to check your credit score.
Kriben Reddy, Head of Consumer Solutions at TransUnion Africa joins 959 Breakfast with Dineo and Sol to share how exactly credit scoring works.
The concept of credit scoring.
“A score is a 3-digit number. Every bureau will have a way of how they are calculating the score. the score is a snapshot into the view of a consumer’s credit health or creditworthiness,” says Reddy.
“It takes into consideration the number of accounts you have and you transact on them.
So in essence, the better the score, the “lower the risk of the individual and your ability to get more credit become easier vs someone will a lower score.”
How to build and improve your credit score.
“Things like your car and property are things the average consumer has to purchase on credit,” advises Reddy.
“The stuff that you should be avoiding is taking on credit for your normal living expenses.”
He notes that these are the items holding people back. “The higher the interest rate, the longer it is going to take to pay it back. Store cards, for example, will have a higher interest rate,” he shared.
How to build and improve credit score
“A credit report, which is free, is a good starting point,” recommends Kriben Reddy.
This report gives you the full history of how you’ve been interacting with your accounts and which lender has looked at your profile and what negative information is on your report.
“Most people only find out about that when they get declined,” said the Head of Consumer Solutions at TransUnion Africa.
Listen to the full discussion on 959 Breakfast with Dineo and Sol.
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