Credit Score Ratings And What They Mean

By Mav OT •  Updated: 01/09/24 •  6 min read

Your credit score, a three-digit number, is the key to your financial freedom in this growing world. Your credit score is an essential indicator that lenders consider when assessing your ability to repay loans and it significantly influences your financial prospects. Your credit score serves as a gauge of your financial responsibility. It gives lenders insights into your debt management, loan repayment frequency, and overall financial responsibility.

- ADVERTISEMENT -

The primary objective of credit scores is to assess the level of risk associated with lending money to specific individuals. 

People are categorised into different risk levels based on their credit scores, which can range from 300 to 850. A higher score can improve your chances of obtaining loans and credit cards with favourable interest rates, as it indicates that you are at a lower risk. 

Understanding the factors that impact your credit score, such as your payment history, credit utilisation, and credit history duration, empowers you to make wise financial decisions.

Your credit score ratings tell a lot about an individual and therefore we are going to share with you what they mean. 

Credit score ratings and what they mean

It is essential to have a clear understanding of your credit score when navigating the financial landscape. This three-digit number is typically calculated using a formula that takes into account various factors and usually falls between 300 and 850. 

Several factors contribute to your credit score, such as your payment history, the length of your credit history, outstanding balances, overall debt levels, and the number of credit accounts you have. Lenders rely on credit reports, which are compiled by credit bureaus, to evaluate your creditworthiness. Your credit score has a significant impact on the interest rates you’re offered and the approval or denial of your loan applications. Lenders use your credit score to assess the risk of lending you money.

Here are the credit score ratings and what they mean. 

What credit score ratings mean?

A credit rating is commonly used as a measurement within a broader credit rating system. This system covers a wide range of credit portfolios and uses various methods to measure and assess credit risk. It also considers the potential for a credit rating. Typically, a credit rating is determined using a restricted rating scale.

What is a good credit rating in South Africa?

In South Africa, a good credit rating confirms the creditworthiness of an individual. One’s ability to repay loans can be explained through their credit score rating.
Although there are 5 levels of credit scores, a good credit score rating allows you to request for mortgage, car loan, business loan or any other loan. Once you have a good rating, your qualification to secure loans becomes easy and simple. 

What are the 5 levels of credit scores?

The 5 levels of credit score represent numbers and indicate the performance indicators of individuals. Each level explains itself and can be denoted with the remarks attached to them. 

Below are the 5 levels of credit scores and their remarks.

Poor: 300 – 580

Fair: 581 – 669

Good: 670 – 739

Very Good: 740 – 799

Excellent: 800 and above

How to read credit score South Africa?

Credit score reading could be simple and complicated at the same time. The readings involved a numerical understanding of your ability to repay loans on time and diligently. 

When you plan to read credit score you must first understand the dynamics of a credit score and what constitutes it. 

There are credit bureau support systems that can thoroughly explain the credit score system. If you wish to read credit score you must be well versed with credit bureaus and your financial transactions.

The scores could be self-explanatory as their remarks associated with the numbers indicate how well you have performed. In this instance, you can read and indicate whether a score is bad or good. 

- ADVERTISEMENT -

Keep Reading

Why is my Credit Score Not Increasing?

Why is my Credit Score Not Increasing?

Today, we will be unpacking some of the reasons that may hinder your credit score’s growth and what you can do about it.

How To Check Credit Scores Via FNB App

How To Check Credit Scores Via FNB App

We also look at how one can check credit scores using the FNB app, answering some of the most pertinent questions the public might have about credit scores

How to Get Quick Cash When Your Credit Score is Low in South Africa

How to Get Quick Cash When Your Credit Score is Low in South Africa

How to Get Quick Cash When Your Credit Score is Low in South Africa. Today, we will explore some of them with you.

How to Remove Late Payments From Credit Score

How to Remove Late Payments From Credit Score

How to Remove Late Payments From Credit Score. However, this isn’t always straightforward due to certain rules and procedures.

What Happens To My Debt When I Leave South Africa?

What Happens To My Debt When I Leave South Africa?

Let us take you through what happens to your debt when you leave South Africa and other related topics. 

Why Your Credit Score Goes Down When Checked

Why Your Credit Score Goes Down When Checked

Today we look into the facts behind this common myth, when a credit check will really pull down your credit score

How to Check Credit Report For Free in South Africa?

How to Check Credit Report For Free in South Africa?

This article explains the steps you can take to check your credit report for free in South Africa. 

How Does Your Credit Card Impact A Credit Score?

How Does Your Credit Card Impact A Credit Score?

How Much Does Pulling Your Credit Affect Your Score?

How Much Does Pulling Your Credit Affect Your Score?

Today we unpack this common question and everything you should know about pulling credit reports. 

Does Credit Score Affect Your Car Insurance Rate?

Does Credit Score Affect Your Car Insurance Rate?

This article explains all the important aspects of credit scores and how they affect your car insurance rate. 

How to Enhance Your Credit Score After Debt Counseling

How to Enhance Your Credit Score After Debt Counseling

Don’t lose hope! You can still take steps to rehabilitate your credit and get yourself to a better place financially. 

How to Improve Your Credit Score After Bankruptcy

How to Improve Your Credit Score After Bankruptcy

How to Improve Your Credit Score After Bankruptcy. Read on to learn how to improve your credit score after bankruptcy.  

How to Find Out What’s Affecting Your Credit Score?

How to Find Out What’s Affecting Your Credit Score?

Today, we will walk you through working out what is affecting your credit score and how to fix it.

How to Apply for a Credit Card With Bad Credit

How to Apply for a Credit Card With Bad Credit

Today we will walk you through everything to know about applying for a credit card with bad credit, and how you can improve the situation. 

Can You Open A Checking Account With A Bad Credit?

Can You Open A Checking Account With A Bad Credit?

This article tries to delve into the possibilities in an attempt to give answers to an individual needing to open a checking account with less-than-perfect credit scores.