How to build a Strong Credit Profile

Albert Johnson
Aug 25
3 min read

Updated: Sep 16

At some point, we all find ourselves needing credit for a purchase, whether it’s for a home, vehicle, or even a cell-phone contract. A solid credit score not only influences whether you'll qualify for credit but more importantly, the interest rate you'll receive.

Let’s unpack How to Build a Strong Credit Score and maintain a healthy credit profile.

1. What is a Credit Score?

Think of your credit score as a snapshot of your financial behavior over the past two to three years. It’s a metric that the lending institutions use to assess your reliability. Specifically, how faithfully you’ve paid off past debts and manage new financial obligations. A good score can open doors and give you access to better Interest rate.

Think about it as having an incentive for having and maintaining a responsible credit profile.

2. Let Your Credit History Grow Organically

There’s no quick hack to obtaining an excellent credit rating. It’s a reflection of steady, responsible habits over time. Stay disciplined with regular repayments and avoid taking on unnecessary credit just because it’s offered.

Using a budget and budgeting allows you to systematically ascertain what your spending is, what your income is and how best to keep your expenses low, whilst growing your investment capital.

3. Know the Difference: Good Debt vs Bad Debt

Good debt helps you move forward—think of student loans, property, or necessary healthcare. It contributes meaningfully to your long-term financial stability.
Bad debt, on the other hand, funds short-term wants and desires like a flashy gadgets or luxury items which is financed through unsecured loans or large credit card debt. Lenders may view you as higher risk if your debt doesn't serve long-term goals.

4. What Score Should You Aim For?

In South Africa, a credit score between 650 and 669 is considered good, while anything above 670 falls into the excellent category. That said, even with a solid score, lenders may factor in your current debt levels, especially your debt-to-income ratio.

5. How to Boost Your Credit Score

Here are some practical steps to gradually improve your credit health:

Stick to payments: Avoid missing any due dates. Check your budget, and make those payments on time, every time.
Tackle short-term debt first: If you have extra cash at month’s end, use it to chip away at the balances that cost you the most in interest.
Keep spending realistic: Avoid luxury purchases on credit that you can’t actually afford.
Track your money: Keep an eye on where every rand goes—financial discipline starts with awareness.

6. Why Strong Credit Makes You a Better Borrower

A better credit score signals reliability to lenders which translates into you're more likely to be approved and qualify for favorable interest rates. Conversely, poor credit could raise red flags or lead to higher costs—even if you're approved.

You want to get the best possible interest rate, at the start of the agreement. Think about it as a marriage, in which you enter into. When the documents are signed, the terms are spelled out.

By understanding these aspects of long-term insurance, you can make informed decisions to safeguard your and your family’s financial future.

7. No Credit History? Here's What to Do

Having no credit history doesn’t mean you’re in financial trouble, it simply means there's not enough information to assess your risk. Lenders may then view you cautiously.

If you're just starting out financially:

Consider a prepaid or secured credit card, where your own funds back the credit limit.
Or apply for a low-limit credit card to build history gently. If you buy R1 000 items, settle the entire amount at the end of the month. Then repeat, and over time this adds up into increasing your reliability and worthiness.

Final Thoughts: Build Wisely, Borrow Thoughtfully

Your credit score isn’t just a number—it’s a reflection of how you manage money. To safeguard your financial future: