How to improve your Credit Rating - from Red or Amber to Green
The Good Ol' Days
When I was still a student, I used to love my Edgars account because I could shop for all my clothing essentials like t-shirts, Levi's jeans, and sneakers. My account was up to date only because my grandmother used to pay for it. Things started going south when I started working and paying for my Account myself. Needless to say, I was paying late or not at all. My Credit Rating went from Green to Amber and from Amber to Red within six months.
What it means to have a Green vs an Amber or a Red Credit Rating
At Clear List, we've simplified how we categorize your Credit Rating so that it will be easier to check where you are currently and to map out where you would like to be and how to get there.
Green Credit Rating: You are in this category should your Credit score be 750 points and above. If the following ideal conditions are met: you do not have any Accounts in Arrears, no legal action has been taken against you (Default(s), Judgment(s) etc) and your Affordability is good - then you should be approved for Credit. You pay the lowest interest rate in this category.
Amber Credit Rating: You are in this category should your Credit score be between 650 and 750 points. Chances of getting approved for Credit are 50/50 if the ideal conditions mentioned previously are met. Your interest rate will be higher.
Red Credit Rating: You are in this category should your Credit score be 650 points and lower and you will not be approved for Credit even if the ideal conditions are met.
Why was I declined for Credit?
First, Creditors check your Credit score to determine which Credit Rating category you fall into.
Second, Creditors check if you have any Accounts that are in Arrears. You will get declined for Credit if this is the case.
Finally, Creditors check if any other Creditors have taken any legal action against you and have listed this information on your Credit profile. This normally happens when you skip payments for at least nine months in a row.
These listings include Defaults, Judgments, Debt Review etc. You will get declined for Credit if this is the case.
How to go from Red or Amber to Green
Your Credit score is affected negatively when you pay your Accounts late or you skip payments. Your Accounts fall into Arrears as a result.
If you have a number of Accounts that are in Arrears and they seem to be a bit overwhelming, check your Credit report to see what the minimum installment amount for each Account is and pay this amount for at least three months and when your financial situation improves, you can pay more than the minimum amount. This will reduce your Arrears amounts. Your aim should be to pay your Accounts up to date and you should see an increase in your Credit score - this typically takes between three to six months.
The Golden Rule is: Pay your Accounts on time, every time!
if you have missed a payment get current and stay current.
Get a copy of your free Credit report from us and we'll tell you if you are Red, Amber or Green and we'll also give you written recommendations to improve your Credit Rating.
All the best in your current and future Credit applications.
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