7 Credit Score Factors That Matter

Credit scores are used by businesses and financial institutions when deciding whether to extend credit to a customer.

Although the decision whether or not to grant credit does not lie with the credit bureau, your credit report is used by credit providers – banks, retail stores, cellphone companies and so on. Your credit record affects almost every major milestone in your life, so allowing debt to affect your score has long-term implications. This is one of the reasons why we encourage people to get help with bad debt before permanent damage is done.


You need a good credit score before you apply to buy an item on credit. The store you are buying the item from will do a credit check on you. A credit rating is a way of showing the store or vendor how likely you are to pay your bills. If you have a high score you are seen as more trustworthy, as it means you are more likely to be able to pay them back. However, if your score is lower, then you are seen as more of a risk.


Here are the 7 factors that make up your credit score. Understanding these will help you achieve a healthy credit score:

  1. Payment history: One of the biggest contributors of your credit score is how well you pay your debts each month. Are you consistent in making your minimum monthly repayments on your loans? When you default on your payments or are always late when having to pay, it affects your credit score. So if you’re wanting to build your credit score, paying your debts on time is the best place to start.
  2. How you use credit: The rule of thumb is to use no more than 30% of your available credit. The more you use, the lower your credit score. The less you use of the available credit, the higher your credit score will be.
  3. Credit history: This ingredient is the reason why experts advise that you keep credit accounts open, even if you’re not using them. The longer you can show you’ve had credit, the better your credit score will be. Unless you’re avoiding paying annual fees, then keeping your accounts open will help you improve your credit score.
  4. The kinds of credit you have: There is credit which is considered good credit, which is typically secured credit and is used to build assets like a home loan or vehicle finance. Having good credit, which you repay well, will support a good credit score.Then there is credit which is considered bad credit. This is retail credit which is used for consumption, like retail store accounts which are used to buy food or clothing on credit.  If you have many retail store accounts with high usage of credit balances this will negatively impact your score.So having a good mix of credit means having good credit to build assets of value and limit use of bad credit like retail store accounts which are used for consumption to buy food or clothing.Just remember to keep up with the payments to avoid a negative report on your payment history.
  5. Credit inquiries: Every time you apply for a new loan or credit, the creditor will make what is called a ‘hard inquiry’ on your credit score to evaluate whether you are a safe or risky customer to lend credit to. Each inquiry causes a decrease in your credit score.
  6. Debt balances: This calculates the total amount that you owe to the different creditors in debt.
  7. Court judgements: Court judgments may damage your credit score. A negative judgment stays on your credit record for up to five years.


There are four main credit bureaus in South Africa. These are Transunion, Compuscan, Experian and Xpert decision systems. Each bureau is able to give you your credit score. According to Clear Score, these are the credit score ratings:

  • 0-527: Very poor
  • 528-602: Poor
  • 603-649: Fair
  • 650-669: Good
  • 670-705: Excellent


Your credit score is the key indicator of your financial health and it is permanently attached to your name. We would like to encourage everyone struggling with bad debt to seek help before your credit score is affected. If you would like to talk to a Debt Counsellor about your credit score and discuss whether Debt Review is the right solution for you, please reach out to us at wecare@debtcare.co.za or phone 0861 977 873.

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