The start of a new year is a great time to review your finances and saving habits and to check up on your credit profile. Often it is only when you apply for credit and get turned down that you realise you have a bad credit profile and could potentially be considered a high credit risk. For many of us this often comes as quite a shock.
Mellony Ramalho, African Bank’s Group Executive: Sales, Branch Network says many South Africans are surprisingly unaware of the importance of a good credit profile. Today many potential employers look at credit profile reports as a way to judge a person's character and level of responsibility. It is definitely worth checking.
So what is a credit profile? “It all starts with information from the Credit Bureau,” says Ramalho. The organisation records all credit applications, credit agreements, payment history and payment behaviour, as well as other consumer credit related information.
“Your information – both positive and negative – is stored by the Bureau. Importantly to get good credit, it helps if you have existing credit.”
Ramalho explains that good credit profiles are gained when you borrow money and pay it back on time and for the full amount. Having a good credit profile enables you to borrow more money on more favourable repayment terms.