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Credit score South Africa: Everything you need to know

Your credit score is a significant factor in whether you get home loan approval, so here's what you should know about credit scores in South Africa.

Credit Score

Article summary

  • Your credit score plays a significant role in determining whether or not a bank approves your home loan.
  • Your credit score is based on factors such as your level of debt, and how timeously you pay your bills.
  • Find out your credit score by using ooba Home Loans’ online prequalification tool, the Bond Indicator.

As far as your bank is concerned, your credit score is a big number above your head that tells them how much of a risk you are. It plays a significant role in determining your chances of obtaining approval on a home loan application.

With that in mind, here’s what you need to know about your credit score in South Africa.

What is a good credit score in South Africa?

Your credit score will be a three-digit number ranging from 0 to 999.

You need a credit score of at least 600 for the bank to even consider your home loan application, while anything above 650 is considered a decent credit score.

Here’s a more detailed breakdown:

  • 670+ = excellent
  • 650 – 669 = good
  • 634 – 649 = average
  • 618 – 633 = below average
  • Below 618 = very poor

How do I find out my credit score?

ooba Home Loans — South Africa’s leading home loan comparison service, makes this easy with their free, online prequalification tool, the Bond Indicator. You can use this to find out your credit score, as part of the process of determining what you can afford on a home loan.

Alternatively, you can contact ooba Home Loans and get your credit score and affordability verified by one of their home loan consultants.

Who calculates my credit score and how?

A registered credit bureau will compile a record of your personal credit transactions on behalf of the bank, and calculate your credit score based on the following:

  • Your debt repayment history.
  • Amounts owed.
  • Types of credit applied for and how often.
  • How long your accounts have been open.
  • How much of your available credit you’re using.
  • Whether there is any history of you not honouring a debt obligation that resulted in bankruptcy or a judgment against you.

Why is it so important to have a good credit score?

As mentioned, a good credit score is essential to getting your home loan application approved. In addition to that, it grants you a stronger bargaining position with the bank, and improves your chances of getting a favourable interest rate on your home loan, saving you money in the long-term.

Does a low credit score mean I have no chance of home loan approval?

Should the bank deem your credit score too low and reject your home loan application, you have two options:

  • Apply to a different bank.
  • Focus on improving your credit score, and apply again within 6 to 12 months.

Different banks have different lending criteria, and some may be less strict than others. So, another bank may be willing to accept a lower credit score.

This is where employing the services of a home loan comparison service like ooba Home Loans can be a big help. We submit your home loan application to multiple banks, increasing your chances of getting approval.

How do I improve my credit score?

If you’d rather try and improve your credit score, thus increasing your chances of getting home loan approval (as well as earning lower interest rates), there are a number of ways to clear your credit record:

  • Pay outstanding bills.
  • Pay all your incoming bills on time.
  • Pay more than just the minimum instalment on your bills.
  • Pay off credit card debt.
  • Avoid spending up to your credit limit on your credit card and store accounts.
  • Pay off store credit, cell phone accounts and bank loans – especially for other assets, such as a car.
  • Refrain from opening new credit accounts where possible.
  • Check your credit report for inaccuracies and take it up with whichever credit bureau performed the calculation.
  • Close your accounts when you’ve paid the balance owing.

How long does it take to improve your credit score?

According to businesstech.co.za, improvements usually start showing up on the credit record after around three months, but it’s recommended to wait about six months before reapplying.

Give yourself the best chance of home loan approval

As mentioned, ooba Home Loans improve your chances of home loan approval by submitting your application to multiple banks. Even if you’re confident in your credit score, we will give you multiple home loan packages to compare, allowing you to choose the one with the lowest interest rates.

We also offer a range of tools that can make the home buying process easier. Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.

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