The Ultimate Guide to Perfect Credit Scores in South Africa revealed. We have conducted extensive research to compile a guide for South Africans on achieving perfect credit scores. This is a complete guide to Perfect Credit Scores in South Africa.
10 Best Forex Brokers in South Africa for 2025
Rank
Broker
Review
Regulators
Min Deposit
Official Site
Credit Scores in South Africa Review – 7 Key Point Quick Overview
- ✅ What is a Credit Score?
- ✅ What do Credit Ranges Mean?
- ✅ What are the Benefits of a Good Credit Score in South Africa?
- ✅ How are Credit Scores Determined in South Africa?
- ✅ How can South Africans Receive and Maintain Perfect Credit Scores?
- ✅ Conclusion
- ✅ Frequently asked questions
In this in-depth guide, you’ll learn:
- What is a Credit Score?
- What do Credit Ranges Mean?
- What are the Benefits of a Good Credit Score in South Africa?
- How are Credit Scores Determined in South Africa?
- How can South Africans Receive and Maintain Perfect Credit Scores?
What is a Credit Score?
Lenders use a three-digit figure called a credit score to evaluate whether a potential borrower is a good risk to provide credit (such as a loan or a credit card).
Your credit score is based on the information in your credit report, which details your repayment history and other financial behaviors in the past. So, when you request a loan, the lending institution can determine the degree of risk you pose.
What do Credit Ranges Mean?
Your credit score is calculated using a formula based on the following characteristics namely:
- How your debt has been repaid.
- The amounts that you owe.
- The type of credit you have applied for and how often you have applied.
- The duration of open accounts.
- The amount of available credit currently in use.
- Any history of failure to honor debt obligations that led to bankruptcy or judgments against you.
Furthermore, these characteristics could impact the interest rate you pay to a lender and even whether you are accepted for a loan, among other factors. For example, credit scores in South Africa are presented as three-digit numbers ranging from 0 to 999.
Typically, you will need a credit score of at least 600, or more, to be considered for a personal or a home loan. Scores from 650, and upwards, are ideal and considered decent in South Africa. The breakdown of credit scores in South Africa is as follows:
- Below 618 is considered extremely poor.
- Between 618 to 633 is below average.
- A credit score between 634 and 649 is average.
- Between 650 and 669 is considered good.
- Anything above 670 is considered excellent.
Below 618 – Poor
This shows a damaged credit history that could result from defaults on credit products from various lenders. It could also result from bankruptcy, which can typically remain on your record for several years.
Between 618 and 633 – Below Average
Those who fall within the below-average category have some dents to their credit history, but there are no key issues. Lenders could still consider people with such credit scores, but they are typically classified as elevated risk and will pay higher interest rates.
Between 634 and 649 – Average
People with average credit scores can typically expect competitive interest rates. However, they are unlikely to receive the same ideal rates as people with much higher scores.
Between 650 and 669 – Good
This category indicates a financially responsible consumer in terms of money and credit management.
Furthermore, it indicates that all their credit payments are updated, and they do not use credit excessively. In addition, these credit scores indicate that credit card balances are low.
Above 670 – Excellent
South Africans with excellent credit scores are considered consistently financially responsible in terms of credit. Therefore, these are prime candidates in terms of the best interest rates, especially considering that they have no record of overdue payments or defaults.
What are the Benefits of a Good Credit Score in South Africa?
Your credit score is used by a variety of institutions, including banks, financing firms, shops, and even proprietors, to assess your reliability as a borrower or tenant.
If your credit is poor, you cannot acquire the loan you need and must pay higher interest rates. Furthermore, with a poor credit score, you could be denied the apartment or home of your dreams.
Although every South African is legally entitled to a free credit report once a year from one credit agency, few realize this number’s significance.
A solid credit history opens many doors, and the financial advantages of having excellent credit are the most significant.
You can get approval for Credit Cards and Loans
Many people denied a loan or credit card in the past tend not to try again. Even if you have a good credit score, the lender will consider other criteria, such as income and debt.
A high credit score, however, improves one’s chances of being granted new credit. This means you can apply for a loan or credit card without worrying about your application being denied.
You are eligible for lower interest rates on credit
People with excellent credit scores are more likely to be approved for credit and may even get preferential interest rates. Improving your credit score is prudent since it might result in lower interest payments on your debts.
Good Credit often comes with certain rewards
It is common knowledge that having a decent credit score is necessary for applying for the top rewards credit cards. A high credit score also allows you to take advantage of the best promotional deals and reward incentives on new credit cards.
You have more power in negotiating
If you have a high credit score, you may use it to your advantage when applying for a credit card or a loan. Also, if you want extra leverage in negotiations, you might use favourable offers from other businesses to prove your good creditworthiness.
You can rest assured that you are better prepared
Your ability to borrow money when you need it is contingent on your credit score. If you ever find yourself in an inconvenient situation and need to open a credit card, this information could come in handy.
You can receive higher limits on credit
People with strong credit often get more favorable loan conditions than those with low credit. Therefore, you can earn a bigger credit card limit or be eligible for a cheap fixed-rate mortgage, for instance.
You receive approval for home rentals easier
More proprietors include credit check results in their tenant selection processes. Therefore, if you have a high credit score, you will not have to waste time and energy trying to locate a proprietor who will accept you despite your credit history.
You can apply for and receive a personal loan from your bank
A solid credit score can qualify you for reduced interest rates on every personal loan if you ever need a car loan, a home improvement loan, or a business loan.
With a good credit score, you will be eligible for the lowest interest rates and fees on new loans and credit lines, and if you are looking for a mortgage, you may save up to 1 percentage point in interest.
Your car insurance rates are better
If your credit is good, you could expect reduced insurance premiums compared to similarly situated candidates with less stellar credit.
You can apply for and receive cellphone contracts easily
By signing a contract, those with excellent credit may avoid paying a security deposit and earn a discount on the newest phones.
How are Credit Scores Determined in South Africa?
It would help if you fully grasp the factors in calculating your FICO (Fair Isaac Corporation) score. Moreover, FICO is a business that creates credit scores using algorithms, which are statistical calculations.
A person’s credit score often determines loan qualifications and interest rates, and the most popular of these scores is the Fair Isaac Company Score (FICO).
The risk of lending is calculated statistically by credit score organizations. Therefore, they do not consider a person’s gender, age, race, or religion when calculating their ability to repay a loan.
Although FICO and other credit scoring agencies are always tweaking their algorithms, the following are the broad areas that FICO typically uses when calculating credit scores, along with a ballpark estimate of the weight each category now carries.
- Payment history comprises around 35% of the credit score.
- The proportion of amounts outstanding compared to credit limits is around 30%.
- The length of credit history comprises around 15%.
- The frequency of new credit accounts for around 10%.
- The types of credit used account for around 10%.
Payment History
The payment history considers any overdue payments, including the number of on-time payments, lateness, the recency of any delinquencies, and the total amount outstanding. This is where individuals might occasionally have credit difficulties.
The good news is that earlier records, even negative ones, often vanish off credit reports after a period, typically seven years for overdue payments and 10 years for bankruptcy filings.
Credit Limits
The ratio of amounts outstanding to credit limits is your debt-to-credit ratio. For example, suppose you have three credit cards, each with a 10,000 ZAR credit limit. Moreover, this provides you with a total credit limit of 30,000 ZAR.
Furthermore, you might only be utilizing 10% of that. However, if you have maxed out a card, you should maintain your debt-to-credit ratio below 50%.
Credit History Length
Length of credit history considers the average time you have had credit card accounts. The longer your payment history of on-time payments, the higher your credit score.
Frequency of New Credit
The frequency of new credit is essential because if you have many newly issued loans or credit cards in your credit history, lenders could question your capacity to repay this new debt. They will thus be less willing to lend you money.
Types of Credit Used
Lenders like to see that you can manage various credit types when reviewing your credit history.
Therefore, a person whose only debt is credit card debt would have a worse credit score than someone whose payment history also includes installment loans, home loans, and school loans.
How can South Africans Receive and Maintain Perfect Credit Scores?
The process of establishing credit from scratch is time-consuming and labor-intensive. Nothing can be done quickly, and it will take time. However, you can make your credit score work by learning more about how it is calculated and taking steps to enhance it.
Therefore, we have detailed some steps South Africans can follow to receive and maintain perfect credit scores.
Understand how Credit works in South Africa
Learning the ins and outs of the credit system is necessary before establishing your credit history. Unfortunately, since credit is not required in schools, most graduates are left clueless about how credit works or how to utilize it to their best benefit.
Borrowing funds from a bank or other lending organization is the essence of credit. You and your lender have settled on a monthly payment schedule for the principal and interest. When making a loan request, you can also choose between secured and unsecured credit.
- “Secured credit” refers to a loan backed by collateral, such as a vehicle or house. If you cannot make the required repayments, your assets could be seized and sold to cover the debt.
- Credit cards, retail credit cards, and unsecured personal loans are all examples of unsecured credit.
As a credit score is a three-digit figure required to qualify for the credit, this number helps lenders estimate what kind of a payer you are likely to be.
Furthermore, you could get better interest rates and more flexible payment arrangements if you have a solid credit history that proves you are a responsible borrower.
It is important to start small
You can build your credit history by applying for a shop account or a credit card. Starting with a low credit limit and gradual expansion as your comfort level grows is best if you are starting to grow your credit.
Improving your credit score takes time, so starting with a low credit limit and utilizing just a tiny portion each month is a good strategy. You may request a higher credit limit after you feel more confident using credit.
Increase Your Credit by adopting Good Financial Habits
- Paying your payments on time is essential for increasing your credit score. Nothing is more valuable.
- Light but consistent usage of credit accounts is also essential. Learn each card’s credit limit and charge no more than 30 percent of that limit.
- Pay outstanding balances in full. There is no reason to carry debt if your objective is to improve your credit score. However, pay them off as fast as feasible if you have outstanding amounts.
- Avoid canceling accounts if you are attempting to build credit. Once your credit score reaches approximately.650, you can close one or two accounts without substantial consequences, but you should keep your credit cards with the highest limits active.
Reduce the amount you owe
Utilize the credit report to detail all your obligations. Then, sort them according to the respective interest rates. Then, prioritize paying off the accounts with the highest interest rates while keeping minimum payments on the others.
Keep updated on your Credit Score
Credit bureaus are not immune to errors. Therefore, ensure that every transactional information on your credit report is correct and yours.
Always look for overdue payments that could be mistakenly stated and verify that the amount due on each credit account is accurate. Moreover, notify the credit bureau immediately of any irregularities you discover.
Maintain and Safeguard your Credit Score
Once you have excellent scores, you have much to lose. For example, a single missed payment may reduce your credit score by more than 100 points. Consider placing your credit cards on autopay to avoid this situation.
Furthermore, a collection account or court decision might lower your credit score. Many medical invoices are sent to collectors with little to no warning. Identity theft could wreak havoc on credit scores, which is an excellent reason to watch your credit report.
Make sure that you can afford your repayment plan
If you have difficulty repaying your debt each month, attempt to negotiate a new repayment plan with your creditor, such as cutting your monthly payments while extending the term of the loan.
Avoid moving debt around, pay off debt
Credit card debt should be kept to a minimum. Excessive debt might damage your credit score, and you should avoid applying for new credit or accounts or increasing your available credit.
Consider building Credit without Debt
Apply for a credit-building loan, which invests the borrowed funds in a certificate of deposit or savings account that you could withdraw after making 12 monthly payments. Numerous credit unions and groups for community economic development provide credit-builder loans.
Another way to establish credit is to apply for a secured credit card, which provides you with a credit limit equivalent to the amount you deposit with the issuing bank.
Stay away from unsecured debt
Secured loans, such as a mortgage or auto loan, are always preferred to unsecured loans, so ensure that your financial portfolio is weighted accordingly.
Be honest with your creditors when you have a problem
Notifying your creditors of your financial issues will not enhance your credit score, but if you can arrange a payment plan, your score should gradually improve.
Remember that outstanding debt remains on your record for several years
A delinquent account will adversely impact your credit score. Making payments or paying off a debt in full will not erase your credit history but will enhance it.
Remember that payment profile information might remain on your record for up to five years. Even if you close a credit card account, your credit score will still display the payment history.
Conclusion
Building and keeping excellent credit does not require that you never borrow money; it requires that you live within your means.
An excellent credit score rating could aid you enormously in achieving life’s milestones, such as buying your first automobile, launching a company, renting an apartment, purchasing a house, or improving your family’s residence.
However, without a credit history, getting the financial aid necessary to attain your objectives will be difficult. To make yourself an appealing potential borrower, be realistic about your financial situation and, more significantly, be disciplined in your debt management.
10 Best Forex Brokers in South Africa for 2025
Rank
Broker
Review
Regulators
Min Deposit
Official Site
Frequently asked questions
What is the fastest way for South Africans to build good credit?
If you want to improve your credit score, the two most effective things you can do are pay your payments on time and reduce your credit card balances.
Every 30 days, issuers record your payment activity to the credit bureaus. Therefore, positive changes might affect your credit score.
What is a good credit score in South Africa in 2025?
A credit score between 650 and 669 is considered exceptionally good for South Africans.
How rare is a perfect credit score in South Africa?
A perfect credit score of 670+ is not rare in South Africa.
What credit score do I need in South Africa to apply for a home loan?
South Africa’s bare minimum credit score for a mortgage loan is 640. It is safe to assume that if your credit score is 600 or above, you will have a good chance of getting a mortgage loan.
However, the percentage you need to borrow from a bank can differ. If your credit score is 670 or above, you have an excellent chance of being approved for a mortgage.
Which factors ensure that I have a good credit score in South Africa?
On-time payments, low balances, a variety of credit card and loan accounts, account age, and a few credit queries are all factors that might boost your credit score.
Addendum/Disclosure
No matter how diligently we strive to maintain accuracy, the financial markets are volatile that could shift and change at any given time, even if the information supplied is correct at the time of going live.
Top 4 Brokers
