Credit Smart - Credit & Loan Options Credit Smart - Credit & Loan Options

Credit Smart

The difference between good credit and bad credit is as follows:-
Good Credit is a term used to mean that you are using your credit responsibly and then you are achieving your dream.

On the other hand if you are using your credit irresponsibly, this is a bad credit behavior and it can get you into a serious money trouble.

When you use your credit responsibly, you benefit in the long term, for example, you use your credit to buy properties, renovate your house, buy a car to go to work , star a business or advance your studies.

If you on the other hand use your credit to entertain your friends, go partying, unnecessary holiday trip, buy consumables, spend on alcohol, this is a big problem.
You’ll end up paying interest on this money with nothing to show for your overspending.

Looking for credit and you don’t know Which type of credit is right for you?

Scenario One: Lets say your car is giving you problems and you need to drive to work. This means it needs to be repaired quickly.

You have to visit a doctor to be checked for your recurring ear infection, you fridge stopped working and you dont have money for all these.
This is where credit card comes into play and rescue you during emergencies like these (small car repair, health and personal)

Scenario Two: Renovating your Home.
You have decided to give your home a face lift, you want to repaint the exterior, replace the couches, carpets, ceiling, redo the kitchen, turn your garage into a cottage or home office.
This is going to cost you alot of money maybe even more than you have saved, but you really know when all the renovation is done, the value of your property will be high.

That’s where financial institutions and banks comes in, e.g Capitec Access Facility, can give you up to R250 000 in
revolving credit to use as and when you need it, comes in handy.

How to be good for credit
Even if you use credit for the right reasons, you still need to budget for it and know that you can afford to repay the monthly instalments.

Factors that will affect your credit rating include:

  • Your repayment history
  • Your outstanding credit balance
  • The length of your credit history
  • The types of credit you have
  • New credit agreements you’ve recently taken up

The cost of credit.

  • An initiation fee
  • A service fee
  • Interest
  • A credit insurance premium

Should you fall behind on repayments, you’ll also have to pay default administration charges and collection costs accrued when your credit provider tries to collect outstanding or overdue debt from you.

These fees and charges add up over time, and the longer you take to repay your debt, the more you’ll end up paying.