Building credit - What you need to know

Having a good credit record makes it more likely that a company will lend you money. It will also help you to get credit again in future (as long as you can afford it).

If you want to build and maintain a good credit record, it’s important to use credit in the right way. You can do this by doing the following:

Only borrowing what you can afford
Making all your payments on time
Paying off your accounts quickly
Keeping your balances low

Some credit bureaus, like TransUnion or Experian, allow you one free credit report per year. So instead of waiting until you’ve applied for credit to find out that you have a bad credit record, you can apply for a free credit check via their websites.

There is no quick fix for bad credit scores. If you want to rebuild your credit score, you need to ensure that all your payments are up to date or paid off, you shouldn’t make any new credit enquiries, and you need to wait.

It’s important to note the following:

Sequestration and administration orders remain on your credit report for five years
Adverse classifications such as continually paying late can remain on your report for one year
Credit enquiries remain on your report for one year

If you notice anything on your credit report that you believe should be removed, you can lodge a dispute with the credit bureau, who will investigate and respond within 20 days.

What is one of the best ways to build a good credit record?

A. Borrowing as much as possible B. Missing payments occasionally C. Making payments on time D. Applying for many accounts at once

1. Why is a good credit record important?

A. It helps you borrow money in future B. It removes all debt C. It guarantees approval D. It increases spending

2. What should you do before borrowing money?

A. Borrow the maximum amount B. Only borrow what you can afford C. Ignore your budget D. Apply for multiple loans

3. What helps maintain a good credit score?

A. Paying late B. Ignoring statements C. Making payments on time D. Avoiding all banking

4. Why is it important to keep balances low?

A. It helps manage credit responsibly B. It increases debt C. It lowers income D. It removes repayments

5. How often can you get a free credit report from some credit bureaus?

A. Every month B. Once a year C. Every week D. Every five years

6. What should you do if you want to improve a bad credit score?

A. Open more accounts immediately B. Ignore unpaid debt C. Bring payments up to date and wait D. Borrow more money

7. How long can adverse classifications remain on your credit report?

A. One month B. Six months C. One year D. Five years

8. How long do sequestration and administration orders remain on your report?

A. One year B.Two years C. Five years D. Ten years

9. What can remain on your credit report for one year?

A. Savings balances B. Credit enquiries C. Salary increases D. Insurance claims

10. What should you do if you find incorrect information on your credit report?

A. Ignore it B. Borrow more money C. Lodge a dispute with the credit bureau D. Close your bank account

Building credit - What you need to know

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