Understanding and Improving Your Credit Score

Adulting | Published: Nov 28, 2025

Credit Score Financial Reputation Debt Management Credit Utilisation Payment History Interest Rates TransUnion ClearScore Home Loan Qualification Personal Finance

Understanding and Improving Your Credit Score

Your credit score is often described as your **financial reputation**. It tells lenders—like banks—how reliable you are at paying back money. The higher your score, the better your chances of getting approved for a car or home loan, and the lower the interest rate you will pay. It can also be a factor in helping secure a rental property.

1. Credit Score Ranges in South Africa

South African scores typically range from 0 to 850. Here is how banks generally view these ranges:

Score Range	Bank View	Implication
700+	Excellent	Likely to get the best interest rates.
670–699	Good	Should qualify for most bonds.
600–669	Fair	May still qualify, but at a higher interest rate.
Below 600	Risky	Likely to be declined or face high costs.

Remember: Even a small difference in your score can cost (or save) you thousands of rands over the life of a loan, car financing or bond.

2. How Your Credit Score is Calculated

Credit bureaus (like TransUnion or ClearScore) use five main factors to calculate your score:

Factor	Weight	Key Action
Payment History	35%	Consistently paying bills and accounts on time.
Credit Utilisation	30%	The amount of available credit you use. Try to keep it below 30%.
Length of Credit History	15%	How long you have successfully managed credit. Longer is better.
New Credit	10%	Don't open too many new accounts in a short time.
Credit Mix	10%	Having a mix of credit (e.g., credit card and car loan) is better than just one type.

3. The 6-Month Plan to Boost Your Score

Improving your score takes time, but the payoff—a better interest rate—is worth it.

Pay Every Bill on Time: This is the most important factor. Use debit orders or reminders to ensure no payment is late, as even one late payment can drop your score significantly.
Reduce Your Balances: Aim to pay down your credit card or retail account balances to **below 30% of your limit**. For example, on a R10,000 credit card limit, try to owe no more than R3,000.
Don't Open New Accounts: Avoid applying for new credit cards, store accounts, or personal loans while preparing for a bond application. Every application leaves a trace.
Keep Older Accounts Open: Even if you don't use them often, keeping older accounts open helps show a longer, more trusted credit history.
Pay Off Smaller Debts: Clearing small loans, clothing accounts, or overdue phone bills reduces your overall debt-to-income ratio.