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

How Long Does Clearing Credit Score Take?

How Long Does Clearing Credit Score Take?

This article is your guide to understanding how long it takes to spruce up a credit score in South Africa

How Long Does A Credit Check Affect Your Score

How Long Does A Credit Check Affect Your Score

These and many more questions are asked about credit checks. Let us delve into more credit checks to gain some insight. 

How to Check A Deceased Person’s Credit

How to Check A Deceased Person’s Credit

Let us walk you through what happens after death. Whether funds can be accessed easily or whether there is a need to dig into the finances of the deceased. 

What is Considered a Good Credit Score?

What is Considered a Good Credit Score?

Today, we will unpack some of the mystery around these numbers, including what is considered a good score and an average score.

How Often Can You Check Your Credit Score

How Often Can You Check Your Credit Score

Also, keeping an eye on your credit score lets you see how it changes over time, which shows you how your finances are doing and point out areas that may need your attention.

How to Check Credit Score On Nedbank App

How to Check Credit Score On Nedbank App

This blog post will focus on credit scores for the Nedbank app and related credit score topics. 

How to Get a Credit Score as a Foreigner in South Africa

How to Get a Credit Score as a Foreigner in South Africa

Today, we are here to dive deeply into that unique landscape with you, to help you better understand how to make the most of your credit opportunities. 

How Do I get a loan Without A Credit Score?

How Do I get a loan Without A Credit Score?

In this blog post, we will take you through how a loan can be obtained without a credit score. We will delve into more topics on the absence of credit scores and its effect on securing a loan. 

How To Check Credit Scores On Standard Bank App

How To Check Credit Scores On Standard Bank App

We’ll also explore how to increase your credit limit within the app and provide tips if your home loan application is declined.

How To Check Credit Score On The Capitec App

How To Check Credit Score On The Capitec App

The post will guide you on how to check your loan rating on the Capitec app, build your readings using Capitec, increase it, and how much advance Capitec can give you.

What Is A Good Credit Score to Buy A House In South Africa?

What Is A Good Credit Score to Buy A House In South Africa?

As we advocate good credit scores, we will take you through the required credit score to acquire a house. 

What is a Bad Credit Score in South Africa?

What is a Bad Credit Score in South Africa?

If you are currently dealing with a low or bad credit score in South Africa, here’s how you can start to fix it. 

How Much Do Estate Agents Charge For A Credit Check

How Much Do Estate Agents Charge For A Credit Check

This piece will provide some information that tends to address how much an estate agent can charge for a credit check

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. 

When Do the Credit Bureaus Update Credit Scores?

When Do the Credit Bureaus Update Credit Scores?

Today, we will look deeper into this often ill-defined and fuzzy aspect of credit scores.