Payment history accounts for 30% of your credit score.

• Always pay before or on the due date
• Always pay the minimum due or more
• Never skip a month
• Too many enquiries in a short time will lower your credit score
• Collection listing such as a default: adverse behavior, enforcement actions, administration orders, debt review notices & sequestration will lower your credit score. credit history can also negatively affect your credit score.
• There are many high-risk types of accounts such as microloans (payday loans) which lower a credit score rating. However, lower risk secured loans such as home loans increase your credit score.

Credit Contract

UNDERSTAND WHAT YOU SIGN
The credit you use should always be within the credit limits you were granted. Exceeding the credit limit will lower your credit score.

Read your financial contracts carefully. Look for hidden extra costs and check what penalties will apply if you pay it off sooner. Never take a loan that doesn’t allow you to pay extra or pay it off sooner.

THINGS TO CONSIDER BEFORE SIGNING ANY CREDIT CONTRACT

• Always think before signing any credit agreement.
• Do not sign immediately or if you feel that you are under pressure to sign.
• Take your time to thoroughly read and understand the terms and conditions of the contract.
• If you do not understand something, ask someone for assistance or clarification.
• Even after you have signed the contract, you are entitled to a cooling off period.

UNDERSTAND WHAT YOU ARE GETTING YOURSELF INTO
As part of the credit contract, the creditor must include the credit agreement schedule which clearly states the amount that has been borrowed, the interest rate to be charged, the instalment, the term of the contract, if any insurance is applicable, when payment is due and the medium for sending statements.

Credit Agreement Schedule

Essential Contract Clauses to understand

When entering into a credit agreement the creditor must request your consent to perform certain functions. However, there may be compulsory clauses in the contract that you may have to agree to as part of the contract.

CREDIT BUREAU CONSENT
The creditor has to have your consent to look at your credit history, send your application for scoring and to submit your payment records to the credit bureau as part of your credit profile.

MARKETING CONSENT
You agree that you may be contacted by telephone, SMS, post and/or email about new products or services – remember you have the right to say no.

INSURANCE
Life cover can be compulsory for certain credit agreements, however if you purchase physical goods such as furniture or a vehicle, you will be also be required to insure them against theft or damage. You have the choice to use your own policy or use the one offered by the credit provider.

Tip: It is advisable to have an independent insurance policy if you have several credit agreements and accounts, instead of having multiple policies with different providers.

CANCELLATION
Always check if there will be costs if you cancel your contract at any point, settle the account earlier than expected or if you can no longer afford the payments. The creditor can also cancel a credit agreement if you default.

Tip: When cancelling any credit agreement, ensure that you receive confirmation in writing from the creditor that the contract has been cancelled.

CESSION
You have agreed that your debt can be sold to a third party (and you do not have to be notified if you are in arrears).

COLLECTION FEES
You agree that you are liable for collection fees, tracing fees and legal fees on the basis of “attorney and own client scale” (this is typically the highest scale). The overall balance of your debt will increase dramatically due to the above fees.

DOMICILIUM
The address which you provide will be considered your living address until such time you confirm change of address in writing.

TRUTH
This is confirmation that all the information you disclose is correct.

Note: This clause can be used as a defense against an allegation of reckless lending. It can still be challenged in court or by a dispute resolution agency.

UNDERSTANDING AND OBLIGATION
You agree that you have read, understand and accept all terms and conditions of the contract agreement and you fully understand all risks, costs and obligations. Furthermore, you agree to fulfil them.

LEGALESE (JARGON OF LEGAL PROFESSION)

The below clauses specify legal requirements:

Jurisdiction

You agree that the creditor can sue you in the magistrate court of their choice.

Whole agreement

This is the only agreement that the judge has to consider if there is a dispute, even if there are other relevant correspondences.

Pay all immediately

Agreement can be terminated, and the full amount becomes due and payable if you are in default or there is a court order for:

• Sequestration
• Administration
• Debt review