Your credit score is one of your most important financial assets – maintaining a good score will enable you to have a good financial life.

But what if you have a low score? Here are a few easy steps to improve your credit score:

Step 1: Figure out why your score is low

The first step is to understand why your score isn’t as high as you might like it to be. To do this, we recommend that you access your credit report – you can do it for free via MoneyShop by clicking here.

Step 2: Choose the right solution based on your problem

Usually you will find that your score is low for one or more of the following reasons:

Problem 1: You don’t have much of a credit history.

This doesn’t mean you have shown ‘bad’ credit behaviour. Rather this means that there is just not enough credit history to say you have a ‘good’ or ‘bad’ credit profile. This is particularly common for younger people who are applying for this first credit product.

Solution: Build up your credit history quickly. Start with entry level credit products like a cellphone contract or a store account. You may only get a small credit limit (maybe only R1000) but at least it is a start. Use this credit each month but most importantly: you MUST pay this back in full each month. You only have one chance to make a good first impression so make sure your first credit impression is good.

Problem 2: You have a history of bad payment.

If you have missed a lot of payments recently it will reflect in your credit score.

Solution: Pay your accounts and wait. Unfortunately, there is not a huge amount you can do about this except to start paying all your accounts on time and in full. After 1-2 years all those bad payments will be removed from your profile and your score will slowly improve.

Problem 3: You have a judgement.

If you had a bad debt and subsequently a judgement was awarded against you, this will reflect against your profile for at least five years and will severely affect your credit profile.

Solution: Pay off the debt and have the judgement rescinded.

This problem will not go away unless you make it go away. And that can only happen by paying off your debt. Once your debt is paid in full, you can have your judgement rescinded. This can however be a complicated process and you may need to involve a lawyer.

Conclusion

When it comes to your credit profile, unfortunately there is no ‘quick fix’ to improve it. Having a good credit score relies on a long-term commitment from you to manage your finances better. So, make sure you only take credit you can afford and always pay your credit commitments back in full and on time.