What is a Credit Score?

Properly defined, a credit score is points allocated on your application by the credit providers when they assesses your application for credit.

However, for a very long time, consumers have been led to believe that their application for credit is decided on the basis of the score displayed on their credit profile. The score that is displayed on the credit profile is calculated using a formula by the credit bureau based on the information they receive from credit providers. This score is not used by credit providers to assess your credit application. They do not even look at it as they know very well that the information used  to determine the score might be erroneous or not up to date, but mostly because they too (credit providers) they have their own internal and unique scoring system. 

WHO ALLOCATES A CREDIT SCORE?

A Credit Bureau can allocate a score, yes they do using a formula known only to them. This score is virtually useless to anybody else,  more especially to the consumer looking at it. A Credit Provider will allocate a score, this score is calculated using their own unique risk management policy plus the credit granting guidelines from the National Credit Act. The Credit Provider score will decide whether they grant you the credit or not.

“Great Spenders are Bad Lenders.”

WHO NEEDS A CREDIT SCORE?

Truth be told, in this age and era of the National Credit Act, nobody needs the credit bureau score. Not you or any credit provider. The National Credit Act provides guidelines regarding the granting of credit that must be adhered to by all credit providers. These guidelines will decide whether you qualify for the credit applied for or not. The NCA guidelines do not include any type of score as a condition for the processing of any credit application. Within each credit provider's credit granting policy, they combine their own risk management policy and the NCA guidelines to allocate you a score. They are not using the credit score displayed on your credit profile.

DO I NEED A CREDIT SCORE?

No! As a consumer you do not need credit score, you don't even need to know what it looks like because there is nothing you can do about it or anything to gain by looking at it. At the end of the day, it is the individual credit provider who assesses your application who will allocate a score for your application based on their unique internal risk management formula.

CAN I IMPROVE MY CREDIT SCORE?

Every consumer wants to know if they can improve their credit score. Given the facts above, it is obvious that a credit score is calculated using different  formula by different credit bureaus and credit providers, As such a consumer cannot improve the score by looking at the score supplied by a credit bureau. The most you can do is to pay your accounts on time. Period. 

It is also very important to ensure that the information on your credit profile is correct and up to date. To maintain an up to date credit profile, we recommend that you check your profile once every 3 months.