Does anyone know how credit score actually works and can dumb it down for me because I am so confused. I applied for a loan and was told the longest term I can take it over is 6 months due to lack of credit score. I was also turned down for a Mr Price account due to low scoring. Yet I paid off 2 6 month loans in the last year with no missed payments.
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Credit Score
- Thread starter SCLittle
- Start date
supersunbird
Honorary Master
There are 4 main credit bureaus. Your previous loan providers might have only provided information on the previous loans to 1 or 2 of them, and the current credit provider is checking the scoring with one where your previous loans are not shown.
If you have R79 (and ID and proof of residence), go to any MoneyMarket counter at Shoprite or Checkers:
http://www.kudough.co.za/shoprite_partner.aspx
agentrfr
Executive Member
How old are you? How long have you had a credit history for? Did you go to university?
I think the algorithm itself is a closely guarded secret, but I believe you increase your score by :
1. Owning property
2. Staying in the same property for a while, with a minimum of 3 years before it becomes a positive factor.
3. Staying with the same bank
You decrease your score if:
1. You fail to pay off any debt
2. You apply for credit too many times in a short space of time. Experian in the UK use more than 3. times in 6 months. I don't know if SA agencies use the same.
I'm not sure any change to the positives mentioned above work, I know that over time they do reset. I think if you move after having lived in a property for a long time, you positive score isn't affected until you move again. Uncertain how many moves it takes for this to start kicking in.
These are the factors I know about in the UK. I can't imagine SA would be very different.
Another factor in the UK which playes a major roll is whether you are on the electoral roll and whether it matches your address. This is often a killer. Most companies in the UK will not give you credit if you aren't on the electoral roll. I mention because of its importance, but I don't know if it is applicable to SA.
I am a developer in short term insurance industry and we use credit scores to determine whether a customer can go on monthly direct debit. In the UK, insurance risk is all annual, which means that monthly payments are an extension of credit.
There might be other factors too, but these are the most significant that I know of.
Ps: I do know that age does NOT directly affect credit score. However individual vendors may have age rules themselves. Eg. Car insurance risk, but that it is not related to your credit score.
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Get your credit report from Transunion (free once a year), or if you're willing to part with a bit of cash, a comprehensive report can be bought from them. Its easy to understand and comes with an actual rating, with details following. http://www.transunion.co.za/
Chevron
Serial breaker of phones
Basically getting debt and paying it off helps your credit score. So having a celphone contract and not falling behind on payments. Even Telkom line helps a lot if it's your name if you have ADSL. But even there you may be required to pay a deposit if you have bad credit.
So a few tips:
1. Get a low credit card if you don't have one. Something like R500.
2. Use it, but never leave it maxed. A maxed credit card, or one with no activity shows you can't pay off your debt. So never let it go over 75%, or just lie dormant. Some people buy their groceries on their card, but they always clear it end of the month.
3. Celphone contracts always help, even if you only have a topup one that's R99 a month. Yeah as well you won't be allowed a high end contract with bad credit.
4. Get an Edgars account with a low limit like R500. Edgars is by far the easiest account to get. You can take the 6months no interest option. Every time you pay off an item you can get another to make sure you're always paying something off. Even if you're just paying off socks.
Basically a credit score is a score of how responsible your are. So if you are irresponsible with the above, your score will suffer.
I've already requested a credit report. The problem is that no one wants to give u an account or credit card without a credit score which I apparently don't have. Any advice on places where I can get going? I know even phone contracts are hard to come by without it and neotel also turned me down due to no credit history
Chevron
Serial breaker of phones
Read my tips and you will come right.
Credit rating agencies will never know how often you use your accounts. They would have to process massive amounts of data from ALL companies. Simply too expensive. They rely on alerts when significant events occur. One of those alerts is "dormant account".
Sounds like the OP's problem is the agencies don't know that he exists. Good tips in this thread to get onto their radar.
An alternative to an Edgar's account is your own bank. They already know who you are. And I assume the OP would have done all the RICA crap with them. Take a small loan. A few hundred. Pay on time. Wait 3 or 4 months, then contact the credit agency to check your score. If they still don't have you on their system, tell them about your bank and your bank loan.
Don't be afraid to challenge them if they have no data or incorrect data.
Sounds like the OP's problem is the agencies don't know that he exists. Good tips in this thread to get onto their radar.
An alternative to an Edgar's account is your own bank. They already know who you are. And I assume the OP would have done all the RICA crap with them. Take a small loan. A few hundred. Pay on time. Wait 3 or 4 months, then contact the credit agency to check your score. If they still don't have you on their system, tell them about your bank and your bank loan.
Don't be afraid to challenge them if they have no data or incorrect data.
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semaphore
Honorary Master
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Scoring is based differently for each different provider giving a potential loan. I have worked on numerous scoring systems, neither of them used any of the factors you mentioned for positive scoring.
You will decrease your score if you have lots of CP/NLR accounts open, you will be reduced drastically if you do not pay them off on time. Excessive use on revolving accounts will also decrease.