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A Fin24 user wants to know how she can improve her credit rating to qualify for more car finance. She writes:
I wanted to apply for car finance, but I don't have any credit on my name since I have never opened any account.
So, whenever I apply for car finance I always get the minimum option, because of my credit rating.
Can my credit be adjusted without me having to open a new account for my credit to be higher?
Sydney Soundy, head of vehicle and asset finance at Standard Bank, responds:
When applying for credit facilities there are a few key considerations that are looked at in the evaluation process.
These factors are considered in a collective approach, meaning that a single factor will not on its own determine the final outcome.
Factors include:
Repayment
The ability of the customer to consistently repay the required instalments over the term of the contract is a factor.
Income
The nature of the customer’s income sources is an important consideration.
This is in order to determine how reliable the customer’s income or cashflow is for the duration of the contract.
Unforeseen emergencies
When customers are assessing their affordability, it is important to consider creating a cushion for unexpected emergencies.
These emergencies may lead to additional expenses, which could interfere with the customer’s ability to repay.
Major unforeseen circumstances are, however, also dealt with by the bank on a case by case basis when they do occur.
It is advisable for customers to contact their banks immediately when they foresee potential repayment problems, so that they can make an appropriate arrangement with the bank.
Potential behaviour
The potential payment behaviour of the customer based on known or recorded history is a factor.
This is where the previous conduct of the customer’s bank accounts is very useful.
Credit references from previously held credit facilities provide a better indication of the repayment behaviour of customers.
No previous credit facilities
If a customer has had no previous credit facilities to provide the required behavioural history, financial institutions may still consider other information that is useful to determine the potential conduct of the customer.
These include:
- The historical behaviour of the customer’s transactional accounts reflected in his or her monthly account statements;
- The payment history on non-credit facility accounts like a Telkom account, cellphone accounts, electricity and water accounts.
Credit bureaus are able to provide ratings to financial institutions based on these types of accounts.
You do not necessarily get a low credit rating because you do not have credit facilities.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
I wanted to apply for car finance, but I don't have any credit on my name since I have never opened any account.
So, whenever I apply for car finance I always get the minimum option, because of my credit rating.
Can my credit be adjusted without me having to open a new account for my credit to be higher?
Sydney Soundy, head of vehicle and asset finance at Standard Bank, responds:
When applying for credit facilities there are a few key considerations that are looked at in the evaluation process.
These factors are considered in a collective approach, meaning that a single factor will not on its own determine the final outcome.
Factors include:
Repayment
The ability of the customer to consistently repay the required instalments over the term of the contract is a factor.
Income
The nature of the customer’s income sources is an important consideration.
This is in order to determine how reliable the customer’s income or cashflow is for the duration of the contract.
Unforeseen emergencies
When customers are assessing their affordability, it is important to consider creating a cushion for unexpected emergencies.
These emergencies may lead to additional expenses, which could interfere with the customer’s ability to repay.
Major unforeseen circumstances are, however, also dealt with by the bank on a case by case basis when they do occur.
It is advisable for customers to contact their banks immediately when they foresee potential repayment problems, so that they can make an appropriate arrangement with the bank.
Potential behaviour
The potential payment behaviour of the customer based on known or recorded history is a factor.
This is where the previous conduct of the customer’s bank accounts is very useful.
Credit references from previously held credit facilities provide a better indication of the repayment behaviour of customers.
No previous credit facilities
If a customer has had no previous credit facilities to provide the required behavioural history, financial institutions may still consider other information that is useful to determine the potential conduct of the customer.
These include:
- The historical behaviour of the customer’s transactional accounts reflected in his or her monthly account statements;
- The payment history on non-credit facility accounts like a Telkom account, cellphone accounts, electricity and water accounts.
Credit bureaus are able to provide ratings to financial institutions based on these types of accounts.
You do not necessarily get a low credit rating because you do not have credit facilities.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
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