Unravelling the link between your money mindset and credit score

According to the National Credit Regulator, South Africans owed R2.31 trillion in 2023, with short-term credit increasing by R235.09 million. Picture: Steve Buissinne/Pixabay.

According to the National Credit Regulator, South Africans owed R2.31 trillion in 2023, with short-term credit increasing by R235.09 million. Picture: Steve Buissinne/Pixabay.

Published Jul 7, 2024


According to the National Credit Regulator, South Africans owed R2.31 trillion in 2023, with short-term credit increasing by R235.09 million. This growing consumer debt highlights South Africans struggling to make ends meet and their need for credit. Ayanda Ndimande, Strategic Business Development for Retail Credit at Sanlam, unpacks the connection between South Africans’ money mindsets and how they impact their financial health.

“Your relationship with money is complex, shaped by your upbringing, family behaviours, relationships, age, and even career choices. But did you know this ‘money personality’ you've developed can directly impact one of the most important numbers tied to your financial health – your credit score? Thankfully, there are practical and emotional ways to break unhealthy debt cycles, improve your credit score, and adopt positive money management habits with support from financial advisers and therapists."

Ndimande unpacks how different experiences influence our relationship with money.

Your formative years shape your money personality

According to Ndimande, foundational experiences with money stem from an individual’s childhood, where their family’s spending and debt management habits influence their relationship with money. She says these early observations and lessons shape how South Africans manage their finances well into adulthood. In the home, finances are not always an open topic – whether it is discussed with your partner or children to enable healthy spending and saving habits. Money talks should be encouraged.

The role of relationships and social influences

Beyond family influence, Ndimande notes that as people grow older, their relationships and social circles also shape their financial behaviours. "Most people don’t realise how relationships we have with a best friend or a romantic relationship influence our financial management.

She adds that peer pressure is not just limited to kids – it pressures adults to keep up with their neighbours’ accomplishments. “This desire to maintain a specific lifestyle can lead to overspending and reliance on debt, potentially negatively impacting an individual’s credit score if not managed responsibly.”

Careers can be positive turning points

Ndimande also reflects on how her early career at a bank reshaped her perspective on personal finance. "Working in a face-to-face branch environment, I interacted with people applying for loans, saw thousands of bank statements, and varying money behaviours. That experience taught me countless valuable money management lessons that I now live by, including avoiding debt traps and living within my means."

She says eye-opening professional experiences can encourage South Africans to change their money behaviour, motivating them to adopt healthier money management practices. This positive shift in behaviour can, in turn, lead to an improved credit score over time.

Breaking the debt cycle requires financial and emotional support

Ndimande says it can be challenging for South Africans who have grown up with family members in perpetual debt cycles to break free from those ingrained behaviours. She advises those South Africans to enlist the help of a financial adviser who can provide objective insights and help them confront hard truths. She also recommends consulting with a therapist for emotional money-related challenges.

"Some of these challenges need more than just a professional financial adviser. For example, someone’s family might guilt trip them for not contributing financially over the festive period, even if they can’t afford to. So, South Africans sometimes require a professional financial adviser in one corner and a therapist to deal with the emotional aspect."

Maintaining a monthly budget can keep you sane and your finances in order

Ndimande emphasises the importance of budgeting as a fundamental tool for maintaining financial health. “Creating a budget every month and sticking to it is crucial. It helps you track your spending, prioritise savings, and avoid unnecessary debt. It’s not just about numbers; it’s about peace of mind and financial stability”.

Know your credit score and take ownership

Ndimande says a credit score reflects an individual’s financial behaviour, specifically how they manage their credit and debt. "Healthy financial habits, like consistently paying your bills on time, keeping credit balances low, and avoiding too many credit applications, generally lead to a higher score. Unhealthy behaviours like missing payments or maxing out credit cards can tank your score.”

She says the first step to improving one’s credit score is facing it head-on and working with a professional credit management partner like Sanlam Credit Solutions. “The ostrich mentality doesn't help. You want to know your score, understand what it means and how you got there. Consulting with a credit management coach can provide personalised guidance on the most impactful changes you should adopt.”

Reshape your money mindset

Ndimande concludes, “Your view of money, shaped by a lifetime of experiences and influences, is deeply intertwined with your credit health. You can take control of your credit story by understanding the psychological factors driving your financial behaviours, assessing your habits, and seeking the professional support you need. Remember, there's always room to improve your score. It just takes one positive behaviour at a time.”