Every credit-active consumer has a credit report which is used by prospective and existing credit and service providers when evaluating new credit or account applications.
What Is A Credit Report?
Credit reports are compiled by credit bureaus by using information that is provided by credit providers on a regular basis. A consumer’s payment behaviour information is recorded with a credit bureau irrespective of whether that person pays their account regularly or not. This includes information about whether a consumer pays his or her account on time or if the consumer has fallen behind on payments. A credit report gives you access to important information provided by your credit providers and also contains a credit score.
What Is A Credit Score?
A credit score is a number that shows your credit standing and how it compares with other consumers. It is calculated using a specific formula and evaluates if, and when, you pay your bills, the amount of debt you have and how you manage credit. A high score indicates a low-risk borrower, while a low score means a high-risk borrower.
Why Is My Credit Score Important?
Credit providers use your credit score to determine if you qualify for a loan and it can also influence how much interest you will pay. It is also considered to be a good indication to credit providers of how likely you are to honour future credit commitments.
How Do I Improve My Credit Score?
You may find that your credit score isn’t what you had hoped it would be. Your credit score can, however, be improved. There are several factors that can influence your credit score, so you need to consider these factors to try and establish what is negatively affecting your credit score:
- Account payment history
- Too much debt
- Negative information
- Length of credit history
- Account application and enquiry activity
By taking these factors into account and taking the necessary steps your credit score will improve over time.
It is important to check your credit report and credit score regularly so that you can see if something is wrong and can contact the credit bureau to dispute any inaccuracies.
According to the National Credit Act (NCA), consumers are entitled to one free credit report annually from one of the registered credit bureaus. Should a consumer require an additional copy of his or her credit report within the same year, there will be a fee that credit bureaus will charge.
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