Lerato’s Story: Understanding and Managing Her Credit Score

Mpumelelo Dlomo
Jun 13, 2025
3 min read

Lerato is a 29-year-old receptionist living in Midrand. She dreams of buying her first car and eventually a home. To achieve these goals, she knows she needs a good credit score — but she’s not sure how it works or why it matters.

What Is a Credit Score?

Lerato learns that her credit score is a number between 0 and 999 (TransUnion’s range) that reflects how well she manages her credit and debt1. It shows lenders how likely she is to repay borrowed money on time. The higher the score, the better her chances of getting loans with favorable interest rates1 5.

Her score depends on several factors:

Payment history (35-40%): Whether she pays her accounts on time2 5.
Amounts owed (30-35%): How much debt she currently carries compared to her income2 5.
Length of credit history (15-20%): How long she’s had credit accounts and her track record2 5.
Types of credit (10%): Having a mix of credit types (e.g., credit cards, loans) is positive2 5.
New credit inquiries (10%): Opening many new accounts quickly can lower her score5.

Why Lerato’s Credit Score Matters

When Lerato applies for a car loan, the bank checks her credit score to assess risk1 6. A high score (above 767 is excellent) means she’s more likely to get approved with better interest rates1. A low score (below 500) could result in rejection or higher costs3 7.

Lerato’s Credit Score Journey

At first, Lerato’s score was “Below Average” (around 540) because she had missed some payments and carried high credit card balances. She realized this was hurting her chances of getting credit.

Tips Lerato Uses to Improve and Protect Her Credit Score

Pay Accounts on TimeLerato sets up debit orders and reminders to avoid late payments, improving her payment history—the biggest factor in her score1 2 5.
Reduce DebtShe focuses on paying down her credit card balances, aiming to keep her credit utilization below 30% of her available limits2 5.
Avoid Opening Too Many New AccountsLerato limits new credit applications to avoid multiple hard inquiries that could lower her score5.
Keep Old Accounts OpenShe keeps her oldest credit accounts active to lengthen her credit history, which positively impacts her score2 5.
Check Credit Reports RegularlyLerato obtains her free annual credit report from TransUnion and Experian to check for errors or fraudulent activity1 6 8. She disputes any inaccuracies to ensure her report is correct.
Use a Mix of Credit Types ResponsiblyShe manages her credit card and a small personal loan responsibly, showing lenders she can handle different credit types2 5.
Consider Debt Counselling if NeededIf overwhelmed, Lerato knows she can seek help from a registered debt counsellor to restructure debt and protect her credit score6.

The Result

After a year of disciplined financial management, Lerato’s credit score improves to “Good” (above 680). When she applies for her car loan, she qualifies for a lower interest rate, saving thousands over the loan term.

Summary: Why Managing Your Credit Score Matters in South Africa

Aspect	Why It Matters	Lerato’s Action
Payment History	Largest impact on score; late payments hurt	Pays bills on time with reminders and debit orders
Amounts Owed	High balances relative to limits lower score	Pays down credit cards to reduce utilization
Length of Credit History	Longer history shows reliability	Keeps old accounts open
Types of Credit	Mix shows responsible credit use	Manages credit card and personal loan well
New Credit Inquiries	Many inquiries signal risk	Limits new applications
Credit Report Accuracy	Errors can unfairly lower score	Checks and disputes errors annually

Lerato’s story shows that understanding your credit score and actively managing it can open doors to affordable credit, better loans, and financial opportunities in South Africa.

If you want, I can provide resources on how to get your free credit report or steps to dispute errors in South Africa.