A credit score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of an individual.A credit score is primarily based on a credit report, information typically sourced from credit bureaus
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Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. Lenders also use credit scores to determine which customers are likely to bring in the most revenue.
How to Check Your Credit Score
Credit scoring is not limited to only banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques. Digital finance companies such as online lenders also use alternative data sources to calculate the creditworthiness of borrowers or customers.
Your credit score assures or gives confidence to lenders that you will be able to pay back their money. It also determines the interest rates which you will be charged on the loan that you take.
In South Africa, three credit bureaus specialize in giving out credit reports. Every consumer is entitled to one free credit report per year and they will purchase any extra reports in case they need it.
The three credit bureaus in South Africa include: