Submitting a credit application can be as simple as entering your information online and clicking ‘send’. However, ensuring that your credit application is processed correctly and stands a good chance of being approved, requires preparation before you submit that form.
Free credit report
The first step in the process is to know what is on your credit report. Lenders use the information on your credit report to help inform them in their decision to lend to you or not. If your report contains errors, this could impact that decision.
For your free credit report, visit Compuscan’s www.mycreditcheck.co.za where you will find details of your account payment history, outstanding balances and instalments. Read this article which contains a list of what you should be checking on your report.
Remember: Check your credit report with all the South African credit bureaus as credit providers might use multiple bureaus when checking your report.
What does my credit score mean?
Your credit score is a good general indication that you may or may not be eligible for credit. A high score strongly indicates that you are good at paying your accounts.
Bear in mind that although your credit score is a good indicator of how you manage your accounts, it doesn’t contain details of your income.
Credit providers use your income to calculate your debt-to-income ratio, which helps them determine your ability to make regular payments. Be sure to be honest when supplying your income and expenses in the credit application.
What if my credit score is bad?
If your credit score is average or less, that means there are issues on your credit report that you need to address. These could include arrears, judgments, having too much credit, applying to many credit providers, etc. Addressing these problem areas will help increase your credit score over time.
Remember: Paying your arrears in full won’t have an immediate affect on your credit score as the credit score takes into account your full payment history for the last few years.
What documents do I need?
When applying for credit, credit providers will require documentation from you. Be sure to have these ready beforehand so that you are prepared. Check with the provider exactly what documentation they will need, however, here are a few general documents most providers require:
- Original identification document. If you are married and your surname is no longer the same as in your identification document, an original marriage certificate will be required.
- Latest salary slip – some providers might request your latest 3 salary slips.
- Stamped bank statements showing your latest 3 salary deposits.
- Proof of address no older than 3 months such as a utility bill, telephone account, financial statement, official SARS correspondence, a TV licence document, etc.
Whenever you apply for credit, remember to ask yourself if you really need it – being credit responsible is the best way to avoid getting into debt.