Before approving your student loan application, financial institutions and lenders will need to make sure that you have a healthy credit score because they need to know how well you’re handling your money and how quickly you’ll be able to repay your debt.
You can apply for a student loan from any bank or financial institution in South Africa, such as Fundi, First National Bank, Standard Bank, Absa and Nedbank.
When applying for a study-related loan, you will have to provide proof of identity and residence, as well as your academic qualifications. The amount you can borrow depends on various factors including your income, credit history and course of study.
According to the credit reporting company, Experian, improving your credit scores can help you qualify for lower interest rates and save you a lot of money in the long run.
Here are a few steps to enhance your credit score while you're repaying your student loans:
Stay on top of financial commitments
Paying your debts on time will increase your credit score, and will let creditors know how well you honour your contracts, because any late or missed payments will reflect poorly on you.
Should you fall behind on your loan repayments, try to get back on track as soon as possible.
Pay your debts
High outstanding debt will negatively affect your score while paying it off will improve it. You can demonstrate this by paying the minimum instalments, paying a little more every month is also best.
Lose what you don’t use
Close all accounts you’re not using because creditors assess the full facility of your credit agreements, even if they’re not being used. The less credit against your name, the lower your risk.
Keep your credit limits high and what you owe low
Instead of asking creditors to lower your credit limits, try to minimise the gap between your amount due and your credit limit. This is a positive in the creditors’ eyes.
Know your rating
South Africans are entitled to one free report per year from credit bureaus, however, additional reports can also be obtained from other platforms such as Creditscore anytime of the year.
It is also important that all your record information is up to date and accurate before applying for additional credit.
