Much is made of credit scores these days. They are often advertised as being something that is good for consumers, but the fact of the matter is that they are there to safeguard the businesses that provide others with credit or loans.

Credit scores have been cleverly marketed. They all tend to say that the better your individual credit score, the easier you will find it to buy things on credit or borrow money. Unfortunately, it also means that the converse is true. If you have an inferior credit score, you will have problems, and here in South Africa, many people experience just this.

The big four

There are four main credit score companies in South Africa. They are Compuscan, Experian, TransUnion, and XDS. All so-called credit bureaus collect information about your creditworthiness from various places. In the main, these are places that land people money – either via store or credit cards, or loans.

When you apply to buy something on credit or ask for a loan, whoever you are approaching will then refer to the credit bureaus to check out your credit rating before they will agree on the sale. Different creditors use different bureaus when it comes to feeding them with your financial data. Youll find that some of them actually use all of the main four bureaus while others may only send information to one of or two.

The upshot of this is that several bureaus may each hold slightly different information concerning your financial history. Because of this, you might like to think about taking reports from various credit score agencies from time to time.

Your free entitlement to an annual report

The big four each have different options. Experian (via ClearScore) will allow you to access your credit rating as often as you like. With TransUnion, you are entitled to one free report per annum. If you want more reports, then you will have to pay R40 for each one.

Compuscan also allows you one free credit report a year. Any others will cost you R25 each, or you can opt for a three, six, or twelve-monthly subscription. As regards the last of the big four (XDS), you can get a 30-day free access period for nothing via Credit4Life, or, if you join their consumer club, you can have access as often as you like for an annual subscription of R99.

What it boils down to is that thanks to the National Credit Act everyone is entitled to one free report annually from any of the agencies.

Not having a credit score can be inconvenient

If you buy anything on credit or you have taken out any loans, you will have a credit score – even though you might not be aware of it. You owe it to yourself to find out what your score is. At least once.

Curiously enough, if you have never bought anything on credit or you’ve never taken out a loan previously, you may not have a credit score. Although some people always buy things for cash, these same folks will find it difficult to get loans or credit precisely because they have no credit rating.

If you do use credit facilities of some kind, your rating or score will be adversely affected if you miss a payment or you miss payment deadlines. If you have a low credit score and you would like to know what you can do about it, please click here.

Is your credit score accurate?

Now knowing that you probably have a credit score, or even if you already knew, you should bear in mind that your score is your responsibility. Bureaus and creditors do sometimes make mistakes in compiling and using this data, so make sure you access your free annual report so you can check it over and right any wrongs.