Your credit score is more than just a number—it’s your financial reputation. In South Africa, having a healthy credit score can determine whether you get approved for a loan, the interest rates you’ll receive, and even the type of car finance you qualify for. Let’s break down everything you need to know about credit scores, maintaining financial health, and improving your chances of securing vehicle finance.
What is a Credit Score?
Your credit score is a 3-digit number (typically between 300 and 800) that reflects how well you manage credit. South African lenders use this score to assess your financial behavior and decide whether to approve your loan application.
Credit Score Ranges in South Africa:
300 – 579: Poor (High risk – very low chance of loan approval)
580 – 669: Fair (Moderate risk – some lenders may approve with higher interest rates)
670 – 739: Good (Low risk – more likely to get finance at better rates)
740 – 799: Very Good (Solid financial standing – excellent loan terms)
800+: Excellent (Minimal risk – best finance options and interest rates)
How Your Credit Score Affects Car Finance Approval
When applying for car finance, banks and lenders check your credit score to determine:
Loan Approval: A higher score increases your chances of getting approved.
Interest Rates: The better your credit score, the lower your interest rate.
Deposit Requirements: If your score is low, you may be required to pay a larger deposit or secure a guarantor.
Loan Terms: A good credit score can get you longer repayment terms and lower monthly installments.
Common Credit Score Issues That Affect Finance Applications
1️⃣ Default Listings
If you’ve missed payments on accounts like store credit, personal loans, or vehicle finance, you may have a default listing on your credit report. These listings stay on your profile for 12 months, even if you settle the debt.
✅ How to Fix It: Contact the creditor, settle the outstanding amount, and request removal from the credit bureau.
2️⃣ Judgments Against Your Name
A default judgment means legal action was taken against you for an unpaid debt. Unlike a default listing, a judgment can stay on your record for 5 years and can affect finance approvals significantly.
✅ How to Fix It: You’ll need to apply for a rescission of judgment through a court order and submit proof to the credit bureau for removal.
How to Build & Maintain a Good Credit Score
Keeping a healthy credit score isn’t just about avoiding debt—it’s about making smart financial choices. Here are some of the best ways to improve and maintain your score:
💡 1. Pay Your Bills on Time
Your payment history is the biggest factor in your credit score. Late or missed payments lower your score significantly. ✅ Tip: Set up debit orders or reminders to ensure all bills are paid on time.
💡 2. Keep Your Credit Utilisation Low
Using less than 30% of your available credit shows lenders you manage your finances well. ✅ Tip: If your credit card limit is R10,000, try to use no more than R3,000 at a time.
💡 3. Avoid Taking on Too Much Debt
Lenders check your debt-to-income ratio—the percentage of your income that goes toward debt repayments. ✅ Tip: If your salary is R40,000, avoid carrying more than R10,000 in revolving credit at any time.
💡 4. Have a Mix of Credit Accounts
A combination of credit types (credit card, vehicle finance, personal loan) demonstrates responsible borrowing. ✅ Tip: Don’t rely on store accounts and credit cards alone—having a diverse credit mix improves your score.
💡 5. Monitor Your Credit Report
Errors on your credit report could harm your credit score without you realising it. ✅ Tip: You’re entitled to one free credit report per year from bureaus like TransUnion, Experian, and Compuscan.
💡 6. Limit Credit Applications
Applying for multiple loans in a short period makes lenders think you’re in financial trouble. ✅ Tip: Only apply for new credit when necessary, and space out your applications.
Can You Get Car Finance With a Low Credit Score?
Yes, but it will be more difficult. Here’s what you can do:
🚗 Save for a Deposit: The bigger your deposit, the less risky you seem to lenders. 🚗 Consider a Joint Application: Having a co-signer with a better credit score can improve your chances. 🚗 Look at Alternative Lenders: Some lenders specialise in financing for lower credit scores but may charge higher interest rates. 🚗 Work on Improving Your Score: If your credit score is low, consider waiting a few months while you build it up before applying for vehicle finance.
Final Thoughts
A strong credit score gives you access to better finance options, lower interest rates, and financial freedom. Whether you're applying for car finance now or planning for the future, following these steps will help you stay in good standing and get the best possible deal when securing your vehicle loan.
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