CREDIT WHERE IT'S DUE

Why a good credit score is so important, and how you can achieve it

- WARREN TROMP

WHILE SOME people have the misperception that credit is bad, the truth is that very few of us can live the lives we want without at least some credit. That credit could be a clothing account or personal loan-or it could be a home loan, vehicle finance agreement, credit card, or some other facility.

To get some credit types, you first need to show that you can manage your credit correctly-and that means you need a good credit score. Most responsible lenders, like banks and other finance providers, use credit scores as a factor when deciding to offer credit. They also use your credit score to work out your risk profile (the chances that you may not repay your credit), which impacts the interest rate they charge you.

Your credit profile gives lenders a good idea of how well you have managed your credit in the past, so if your score is in the upper end (660 and above), you stand a better chance of getting the credit you've applied for. A score at the lower end (590 or less) shows that you haven't been managing your debts that well.