What is a credit record and why do you need one?

We all know that having a good credit record is important, but do we actually know why?

Financial journalist, Maya Fischer French says that credit is something that people do not consider properly until it is too late.

As to what it means, French says that a credit record shows banks etc that you are a good payer with a good attitude towards debt and indicates how much credit you have.

Read: Reckless lending is still common practice in SA

Having a balance between having some sort of credit which shows that you have repaid and not having too much credit gives you a credit score. Your credit score is extremely important over time.

Maya Fischer French, Financial Journalist

Having a good credit record helps in various areas like when opening up a cell phone contract or when getting insurance.

While potential employers are not allowed to look at your credit, French says there are personal agencies who do request to look at your record.

There are a lot of areas your credit record can effect than your cell phone record when you apply for one.

Maya Fischer French, Financial Journalist

To begin creating a good credit record, French says the easiest way is too open an account at a retail outlet, but warns that this must be done carefully and responsibly.

It is easy for you to overuse that account and French says she has found so many young people sitting in huge debt because of store cards. One way to ensure this does not happen is to open one and then close it shortly after.

Another way is to get a credit card. French says that there are many good reasons to get a credit card other than creating a credit record. French says that it is best not to use the the credit line, but because it is a great payment system.

What you do, is you take a credit card, but you set a very low credit limit so that you are almost virtually pre-funding that card on a regular basis.

Maya Fischer French, Financial Journalist

In addition to having self-discipline with your spending habits, French says it is extremely important to check your credit record and not only when you need to.

French says that credit bureau can give you your credit record for free once a year. Checking it will not only make you conscious of your financial status, it will also flag things like identity theft.

Overall, French says that having good credit boils down to one thing - good credit behavior.

Listen to the full interview below:


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