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Here’s a detailed breakdown of what affects your credit score in South Africa and how each factor works:
🔍 1. Payment History (Most Important Factor)
This is the biggest influence on your score.
✅ Positive:
- Always paying your monthly instalments on time (credit cards, store cards, loans, etc.)
- Keeping your accounts current and up to date
❌ Negative:
- Late payments (even by a few days)
- Missed payments or skipping months
- Accounts handed over to debt collectors
- Defaults or write-offs (when a creditor gives up trying to collect)
- Judgments — a court order that says you legally owe money
📊 2. Credit Utilisation Ratio
This is the percentage of credit you’re using out of the total available to you.
Example:
If you have a credit limit of R10,000 and you owe R8,000, you’re using 80%, which is high.
✅ Ideal:
- Keep your usage below 30–40% of your limit.
❌ Risky:
- Maxing out your credit card or store account
- Carrying high balances regularly, even if you pay them off eventually
⏳ 3. Length of Credit History
The longer you’ve had and managed credit, the more reliable you appear.
✅ Positive:
- Old, well-managed accounts boost your score.
- Keeping older accounts open and in use (even with small balances).
❌ Negative:
- Closing long-standing accounts can lower your score.
- Having only new credit makes you look less proven.
🧾 4. Types of Credit in Use
A good mix of credit shows that you can handle different financial responsibilities.
Examples of Types:
- Retail accounts (e.g. Edgars, Woolworths)
- Credit cards
- Personal loans
- Car or home loans
✅ Positive:
- Using a few types responsibly.
❌ Negative:
- Only short-term debt (like payday loans or just one credit card).
- Too many unsecured loans (e.g. personal loans with no collateral) can raise red flags.
📝 5. New Credit Applications / Inquiries
Every time you apply for credit, the lender checks your report — this is a "hard enquiry".
✅ Positive:
- Occasional applications spaced apart are fine.
❌ Negative:
- Too many applications in a short time may indicate financial distress.
- This can signal risk and lower your score temporarily.
⚖️ 6. Defaults, Judgments & Legal Listings
Legal and negative listings are very damaging.
- Default: When you fail to pay an account and the creditor flags it as unpaid.
- Judgment: A court order saying you owe money.
- Sequestration: Being declared bankrupt.
- Debt Review: A legal process for over-indebted people. It helps manage your debt but makes getting new credit difficult.
These remain on your report for several years (judgments = 5 years, defaults = 1–2 years after settlement).
🧾 7. Public Records and Admin Orders
Other public listings like:
- Debt counselling
- Administration orders
- Insolvency notices
These signal that you are not managing your debt independently, which lowers lender confidence.
🔄 8. Credit Report Errors
Sometimes, incorrect data (e.g. showing a paid-off debt as still owing) can hurt your score.
Tip: Check your report annually for free from:
- TransUnion (https://www.transunion.co.za)
- Experian (https://www.experian.co.za)
- XDS or Compuscan
You can dispute any errors you find.
📈 How to Build or Repair Your Credit Score:
- ✅ Pay on time — every time
- ✅ Use less credit than what’s available
- ✅ Keep old accounts open if in good standing
- ✅ Limit applications for new credit
- ✅ Avoid judgments and defaults
- ✅ Check your report regularly for accuracy
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