How to Keep a Healthy Credit Status in Tough Times

Amid economic hardship and uncertainty, protecting your credit health can be difficult and daunting — but it’s probably the most important time to take control of your finances. A recent report by TransUnion South Africa revealed while about one-third (34%) of families reported an increase in their incomes, almost a quarter faced a decline. Even if your income is irregular, unstable or unable to cover the rising costs of living, these steps will help you protect your credit health.

Know where you stand

Accessing and monitoring your credit information is a vital part of managing your credit health, so the credit reporting agencies, like TransUnion, offer one free credit report per year. Lenders typically report updates to accounts each month, but different lenders may update at different times. Make a habit of monitoring your credit regularly.

When reviewing your credit report, look for expected updates and unexpected changes that may need closer review. Your credit report represents how you manage your finances, treat it as a valuable asset. Check your personal information and go through the open credit accounts listed to make sure you recognise all of them. Review account balances and payment histories to be sure they're accurate. If you have a question about a specific item, contact your lender directly to get more information.

Continue making payments

Your payment history is a very important factor in calculating your credit score. Consistently making payments on-time is a good way to protect your credit health. If you think you’ll struggle to make a payment on any debt or loan, talk to the company you have the account with as soon as possible. Most South African companies will help you make a repayment plan rather than lose a good customer as a bad debtor. 

Guard against fraud

In today’s financial landscape, online transactions and interactions have become more complex, and the rise of digital platforms and variety of financial products can be confusing. This coupled with the economic challenges faced by many has created fertile ground for fraudsters targeting businesses and consumers with attempted identity theft and other fraudulent schemes. Be warned and stay wary. Remember, no bank or official lender will ask you to share sensitive information over the phone, email or text message. Only use official bank or lender websites when submitting information online.

Keep credit use low

By keeping your credit usage low — usually below 30% of your available credit — you let lenders know you’re not relying too much on borrowed money. This can make you appear less risky, and potential lenders may be more willing to offer you better interest rates and more helpful loan terms. 

Have a mix of credit

Keeping a variety of credit products, such as store cards, credit cards, personal loans and a vehicle loan, can be good for your credit score. A diverse credit portfolio shows your ability to manage different credit products responsibly. 

Limit new applications

Only apply for new credit when necessary — and not all at once. Each time you apply for credit, an inquiry is made on your credit report, and lenders may view multiple inquiries as a sign you’re in financial trouble or acting irresponsibly with new credit.

Next steps

Maintaining a healthy credit status requires careful planning, responsible management and smart decision-making. But once you begin the process, you put yourself in a stronger position to build a healthy credit score and deal with financial difficulties that may come your way. TransUnion South Africa offers a range of tools and products to assist you in this journey:

• Credit Monitoring: Stay informed with alerts for any critical changes to your credit report, helping you act quickly if something looks amiss.
• Credit Score and Report: Understand how lenders see you by accessing your full credit profile and tracking how your score changes over time.
• IDRecover: Protect yourself with ID theft cover at no extra cost, adding an extra layer of security to your financial life.

By leveraging these resources and following the guidelines in this blog, you can take control of your credit health, better navigate the complexities of the financial landscape, and maintain the foundation for a prosperous financial future.