Did you know that when it comes to scoring, not all accounts are created equally?
Two major scoring aspects are good repayment history (you never skip any payments) and the length of that good repayment period. The longer your repayment record remains unblemished, the more your score will grow.
Scoring then takes it a step further and weights different types of accounts differently. Revolving credit accounts (store cards) and credit cards carry the most weighting. This means that building up long-standing uninterrupted good repayment behaviour under these types of accounts will boost your score the most
. Second in line are fixed term accounts, such as personal loans and vehicle finance. The accounts that hold the least weighting for scoring are your cell phone and telephone, insurance, and DSTV accounts.
The reason for this weighting is that it takes a more credit savvy person to be able to handle revolving credit and credit accounts responsibly. The rule of thumb with these accounts is to never skip payments and not to let the current balance exceed 50% of the credit limit. If you max out these accounts, you will miss out on scoring points. The cell phone and insurance accounts fall in the lower categories because these are service accounts that people tend to pay consistently because the service will be suspended if they do not. You won’t score in the lower risk categories immediately when you start taking on credit.
You must prove your lower risk status by building up long-standing good repayment behaviour under a good variety of types of accounts.
Be patient and you will eventually reap the rewards! To find out your credit score, visit www.mycreditcheck.co.za
to get your full credit report.