A credit report/record is a record of all your credit history from a number of sources, including banks, credit cards companies, collection agencies, department stores, cellular shops among others.  It contains all your credit history, payment history and all accounts that you have.  Your credit history will include how well you pay your debts: do you pay on time? Do you pay late?  Do you pay the required amount or more or less?  Do you sometimes miss some payments?  This information is then used to determine an individual’s credit worthiness, a credit rating.  Would i like to lend you money?  Hmmm – don’t answer that, it was a rhetorical question.

When buying a house, car or applying for a loan or cellphone contract or even opening an account, all these institutions perform a credit check on your name.  This helps them determine whether they would like to lend you their money.  So it is very important to make sure that your credit record is clean by always paying your debts in time and monthly and actively checking it.

Now in South Africa, such reports are maintained by 3 national credit bureaus, namely:

1. Transunion (transunion.co.za)
2. XDS (creditforlife.co.za)
3. Experian (experian.co.za)

Also in South Africa, you are entitled by law to at least one free credit report per year from each credit bureau.  In essence this means that you can get up to 3 free credit reports per year.  Wow!  How so you might ask?

Well, my recommendation is that you register with all 3 credit bureaus and request for your free credit report from each bureau.  Make sure you request the credit reports at least 4 months apart.  And wala!  That gets you a free credit report every 4 months … that’s like 3 free credit reports per year!  Brilliant right?  I know!

Now back to your credit record/report.  Once you have your first free report you must analyse it.  Understand what it means and says about your repayment history.  Understand how much debt you have to your name.  How many active accounts do you have?  How much is your total outstanding debt?  Do you have any arrears?  Do you have any judgements against you?

Analyse your credit report.  Why do you have arrears?  Could it be that you don’t know the real required date of payments for your accounts?  If it is then maybe you should find out that date and change your payment patterns to suit the required date, then your account will not keep reflecting arrears on your credit report.  Also, how do you make your account payments?  Do you pay in store and while paying your accounts you also get to grab a few more items to add to your account?  Stop that!  It’s the 21^st century! Ever heard of internet banking?  Bet you have.  Well try paying your accounts in the comfort of your home or office … how does that feel … no more queues … no more temptations to grab something while paying your account … no more withdrawing money just to pay an account … no more swiping your account card just to pay the account!  Wanna thank me now?  Later?  Maybe thank me later.  The aim of all this is to try and CLEAN UP your credit report/record.

Personally, i get paid on the 25^th of each month (for now that is) but i have insisted that all my big stuff debits come off on either the 1^st or the 2^nd of the month.  Why?  Cause i wanna make sure that any payment reflected on my bank statement is for the current (same) month.  Confused?  During the 25^th to 31^st, i’m paying my accounts – internet transfers of course, nothing else!  The debits, that’s usually the big stuff, bond, rental, vehicle, cell phone, medical aid or insurance these i prefer they go off on  the 1^st or 2^nd.  Usually with these big stuff debits you pay in advance for the following month hence for me a payment during March will be for March.  This means that on my bank statement which i always analyse and download every month (Step 02:  Analyse and download your bank statements) a payment on the 1^st of March is for the month of March. Still confused?  BUT it works for me.  Find out what works for you.  What do you want?  Remember you should be in control.

Back to your credit report.  Make sure you CLEAN UP your report.  It will not happen immediately or in a month or two.  It could even take a few years.  But it has to be done.  Start today to actively start cleaning up your record.  Pay your debts accordingly, in time.  It’s a process –  the road to financial freedom starts at being financially intelligent and that starts one step at a time.  Find a way of paying your accounts and debts in time and in a manner that does not affect your record.  Find a balance.  Find your balance.