CreditGenie

Call 021 835 3030   Member Login   Apply Now

CreditGenie Community

25 And Under - How To Positively Grow Your Credit Report

Credit • by Creditgenie • 19 October 2017

25 And Under – How to Positively Grow Your Credit Report

They call it the “student life” but really, it’s “adult living without the adult responsibility” life - the good years. However, it can also be the most damaging time of your financial life, especially with regards to your credit score and credit rating.

From the time you leave school to around your mid-twenties the chances of making poor financial decisions and lowering your credit score are everywhere – massive student loans, impractical car purchases and a lifestyle that’s unsustainable are but a few things that can not only leave you in a world of debt but also tarnish your credit score and credit rating. It is important to continually check your credit and to be aware of your credit score at all times, especially before making big financial decisions.

Starting Young

Most of us don’t think twice about the future and our credit scores as young adults. Our plans are more tangible and in the present – go to university, get a job and make some money. The issues come in when we have some money but aren’t equipped to use it wisely. Ideally, each and every one of us should be starting to save for our future from the day we start earning a salary and being conscious of increasing and maintaining our credit scores.

Compound interest is just too powerful to ignore.

Compound interest and a high credit rating and credit score go hand in hand. Compound interest is the interest you earn on your monthly loan or deposit that is then added to the entire total, earning more interest each and every month. Basically, it is “interest upon interest” and is the reason saving early pays off in the long run and improves your credit score. By saving a small, consistent amount each and every month for a long period of time, you can effectively save more than if you started saving a larger sum a decade later and improve your credit report.

The Danger of Credit Cards

One thing most under 25’s don’t have is a credit card. If you’re a student you probably don’t think you could even get one. Well, some local banks have realised that students have a need for credit cards to buy things like flights home, online purchases and the occasional emergency that pops up.

Nedbank and ABSA are but two that offer a pure student credit card that not only has no to very low monthly service costs but rather than giving you credit it allows you to deposit money into the card. This means the card works as a credit card, with all the benefits, but without the ability to be abused. Thus, you can play an active role in establishing and maintaining a positive credit score.
 
This might sound like something your normal debit card could do but the best thing about these credit cards is that they allow you to positively affect your credit report from a very early age. Your credit report is basically your financial life in one quick snapshot.
Your credit report shows banks and financial institutions that you not only are able to handle money well but are responsible for borrowing and paying it back on time and in full.
 
The chance to grow your credit score from a young age is something that will impact your life as your credit report has a long memory. Good and bad financial decisions stay on your record for 5 to 10 years, so a good credit score and credit report allow you to get a decent head-start from a young age if handled correctly.

 Check out more of our personal finance articles here.