Being a student in South Africa is an exciting experience, doors are beginning to open and a plethora of opportunities are coming your way. During this time it is important to remember that your actions now will affect choices you make in the future, crucially your credit score. A good score can help provide financial security and mortgage opportunities, a bad score can result in refusal of credit and a lack of financial options when it comes to borrowing.
Ways of making money are regularly suggested to students yet the importance of being financially aware, not just during education but for the future, is not so widely discussed. With simple steps, it is easy to start preparing early on and ensure you maximize your financial potential.
Knowledge is power
Understanding what makes a credit rating good or bad is the first step to being financially responsible. Credit scores are used worldwide, including South Africa, recording both positive and negative data. TransUnion offers the Empirica score, Experian South Africa uses a Delphi credit score and Compuscan uses Compuscore ABC. These are widely used through the country and more information can easily be found about how each individual system works. Some light reading will provide details on how to improve and enhance any score you may have.
Applications and cards
There are various credit card options available to students, many of which can be used to great effect. Using a credit card and regularly paying it off can actually increase a credit rating as it shows lenders that you are capable of making repayments and are a responsible borrower. However, don’t fall into the trap of applying for lots of different cards. Most applications will show on a credit check and if you are declined, or have too many cards in use, this can drastically bring down your overall score. This is not forgetting that it can also be a slippery slope and missing payments will also result in negative points towards your credit score.
Keep up to date
Along with understanding what a score means and how it is affected, you must try to keep up to date with your finances. As a student, it is easy not to keep a record of your finances, when you are busy learning keeping track of applications can be difficult. But don’t fall behind on payments or lose rack, all this information may be important in the future when you wish to borrow.
Being financially smart now can drastically improve your credit rating in the future. It is never too early to start preparing for a future where you have choices when it comes to borrowing. Understand how credit scores are created, how to improve them and create a better financial future for yourself, starting now.