Who decides whether I can have credit? Ultimately, credit providers, such as banks or clothing stores, make the decision about whether or not to give you a loan or let you have an account with them. This usually happens after they have consulted with the credit bureau, which supplies them with information about your credit history. Top Tip: Get a copy of your credit report before you apply for credit. Check the report carefully to see whether there are any errors, and dispute these with the credit bureau. In South Africa, registered credit bureaux are obliged by law to provide individuals with one free credit report each year. Let’s take a look at the Pros and Cons of credit: Advantages of having credit
- If you have credit, you can build a good credit record and history, which will benefit you when you want to make a big purchase on credit later, for example a house.
- Having credit can be extremely beneficial if you have unexpected expenses, for example a medical emergency.
- Credit can help you to buy the items and assets you need now, and pay them off over time.
- Credit is not free! Having credit at a bank, retailer, or other credit provider is not like borrowing money from a friend or family member. There are always additional costs, including initiation costs, service fees, and interest.
- If you don’t use credit responsibly, and spend more than you earn, you might find yourself in financial difficulty and in a negative debt spiral.
- When you have credit, it’s easy to overuse it, which may lead to increased impulse buying and having more debt than you can afford to repay.