Credit Score Myths That Could Be Hurting Your Finances

Your credit score is one of the most important tools in your financial life — yet, it’s also one of the most misunderstood. In South Africa, many people still believe myths that can damage their financial future. If you’re falling for these misconceptions, you could be hurting your chances of getting a loan, buying a house, or even landing a job.

In this post, we’ll break down the most common credit score myths in South Africa, explain the truth behind them, and offer useful tips to build and maintain a strong credit rating.

What Is a Credit Score, and Why Does It Matter?

Before we bust the myths, let’s first understand what a credit score actually is.

A credit score is a three-digit number that shows how likely you are to repay borrowed money. In South Africa, credit scores usually range from 0 to 999, with higher scores meaning you’re more creditworthy.

Here’s a general breakdown:

• 800–999: Excellent
• 700–799: Good
• 600–699: Fair
• 0–599: Poor

Lenders, landlords, insurers, and even some employers check your credit score to decide whether they can trust you financially. A higher score means better chances of getting approved for loans, lower interest rates, and more financial freedom.

Top Credit Score Myths in South Africa (And the Truth Behind Them)

Myth #1: “If I don’t borrow money, I’ll have a good credit score.”

False!

Many South Africans believe that avoiding credit completely keeps their score high. But in fact, not having any credit history can hurt your score.

Why? Because credit bureaus need information to calculate your score. If you’ve never borrowed money, there’s no data to show how responsible you are with credit.

What to do instead:

Start small. You can apply for a store account, credit card, or small personal loan — and make regular payments on time. This builds a positive credit history.

Myth #2: “Checking my own credit score will make it go down.”

Definitely false.

In South Africa, checking your own credit score is called a “soft inquiry” and does not affect your score. Only “hard inquiries” — like when a bank checks your score during a loan application — can impact it slightly.

What to do instead:

Use free services like TransUnion, Experian, or ClearScore to check your credit report regularly. You’re entitled to one free credit report per year from each credit bureau.

Myth #3: “Once I pay off my debt, my credit score will instantly go up.”

Not always true.

Paying off debt is a great move, but it doesn’t always result in a quick jump in your score. The credit system looks at many factors — not just your balances. Also, your credit history stays on record for several years, even after repayment.

What to do instead:

Stay patient. Keep using credit responsibly and monitor your score over time. The impact will come, but gradually.

Myth #4: “A low income means a low credit score.”

Nope.

Your income is not included in your credit score. What matters is how you manage the money you borrow — not how much you earn.

Even if you have a high income, missing payments or maxing out credit cards can lead to a bad score.

What to do instead:

No matter your income, focus on paying bills on time and keeping your credit usage low.

Myth #5: “If I close old accounts, my credit score will improve.”

That can actually hurt your score.

Older credit accounts help show a longer credit history, which is good for your score. When you close a credit card, you may also lower your credit utilization ratio (how much credit you use vs. what’s available), which can hurt your score.

What to do instead:

Keep older accounts open, even if you don’t use them much. Just make sure there are no fees or risks of fraud.

Myth #6: “One missed payment isn’t a big deal.”

It is.

Just one missed payment can stay on your credit report for up to 2 years and damage your score significantly.

What to do instead:

Always pay on time. Set up debit orders or payment reminders to avoid forgetting.

Myth #7: “My credit score is the same at every bureau.”

Not necessarily.

In South Africa, we have several credit bureaus: TransUnion, Experian, Compuscan, and XDS. Each may have slightly different information, so your score can vary.

What to do instead:

Check your score with more than one bureau to get a full picture. And if you see mistakes, dispute them immediately.

Common Credit Score Questions (Answered Simply)

1. How often should I check my credit score?

At least once a year, but ideally every few months. This helps you spot errors, fraud, or any negative trends early.

2. How long do negative marks stay on my report?

• Late payments: 2 years
• Judgments or defaults: Up to 5 years
• Sequestration (bankruptcy): Up to 10 years

But don’t worry — their impact fades over time if you show good behaviour.

3. Does being blacklisted mean I’ll never get credit again?

No. “Blacklisting” is an outdated term. If you’ve had serious issues (like defaults or judgments), you can still rebuild your credit by paying off debt and using credit responsibly over time.

4. Can I have a good credit score if I have debt?

Yes! It’s not about having debt, it’s about how you manage it. If you make your payments on time and keep your balances low, your score will be fine — even with loans or credit cards.

5. What’s the best way to build credit from scratch?

Here’s a simple strategy:

• Apply for a small retail account or credit card
• Use it regularly but keep the balance below 30% of the limit
• Pay in full and on time every month
• Avoid applying for too much credit at once
• In a few months, your credit score will start to grow.

Tips to Maintain a Healthy Credit Score in South Africa

If you want to keep your score high and your financial life strong, follow these practical tips:

✅ Always pay on time

This is the most important factor in your score. Even one late payment can hurt.

✅ Keep your credit usage low

Try to use less than 30% of your total credit limit. For example, if your limit is R10,000, aim to use R3,000 or less.

✅ Don’t apply for too many loans at once

Each application adds a hard inquiry to your report, which can lower your score temporarily. Space out applications.

✅ Keep old accounts open

Longer credit histories show stability and responsibility.

✅ Review your credit report regularly

Check for errors, fraud, or forgotten debts. If you spot a mistake, you can dispute it for free with the credit bureau.

✅ Avoid “buy now, pay later” traps

These services may seem harmless but can lead to missed payments or overborrowing if you’re not careful.

✅ Use credit to your advantage

Instead of fearing credit, learn to use it wisely. Good credit habits open doors to home ownership, car finance, business loans, and more.

Final Thoughts: Don’t Let Myths Hold You Back

Your credit score is not just a number — it’s a tool that can help you live the life you want. But believing in myths or ignoring your credit profile can hold you back in South Africa’s competitive financial world.

The good news? You don’t need to be rich or an expert to have a good credit score. You just need to understand the system, use credit responsibly, and take small steps consistently.

So don’t fall for the myths. Check your score, know your facts, and take control of your financial future today!

 

We hope this information has been very useful to you.

Thank you very much for reading us.

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