IN A NUTSHELL The responsible way to build a healthy credit score is to take on a small amount of credit that you can already afford to repay.
By now, you know that taking out a high-interest personal loan to pay for a birthday party is not a good use of debt.
But what about applying for “good” debt? Like taking out a loan to buy a house or a vehicle to start a shuttle service? (Buying an expensive car that you can not afford is bad debt.) In general, “good” debt is used for things that generate an income (like a rental property) or grow in value (your house).
A student loan can also be seen as “good” debt if it helps you get skills that lead to better job opportunities. While it means taking on debt in the short term, it can open the door to a higher-paying job and stronger career prospects. In that sense, it’s an investment in your future.
Here are 5 easy steps to building a healthy credit score:
Your credit report is your financial track record, and your credit score is the mark you get for it. The best way to build a healthy credit record is to start with smaller retail accounts (clothes or pharmacy) or a credit card with a low limit.
1. Open one small credit facility
The simplest options are:
A small retail account, or
A low-limit credit card (e.g. R1 500 limit)
Credit cards — use with caution
Only consider a credit card if you are a very financially disciplined. Remember, banks want you to borrow from them. That’s how they make money. Banks charge interest on money you borrow and fees for things like card payments and other banking services.
Banks may regularly offer to increase your credit limit as a “reward” for good payment behaviour. Don’t fall for it.
The safest and most responsible approach is to treat a credit card like a debit card: only spend what you can already afford and pay the full balance within the interest-free period (usually up to 55 days).
When you only pay the minimum each month, a large part of your payment goes to interest instead of reducing the debt. It could take years to pay off the debt.
2. Use it for something you already budget for
For example:
Petrol
Groceries
Your cell phone bill
Don’t use it for extra spending. Just move existing expenses onto the card.
3. Spend small — ideally under 30% of the limit
This means if your limit is R3 000, keep your balance below R1 000.
This shows lenders you are not dependent on credit.
4. Pay the full amount every month
Pay the full statement balance before the due date.
Never just pay the minimum.
This is the single biggest factor in building a good score.
5. Be patient
You need about 6–12 months of consistent, on-time payments before your credit profile becomes strong enough to help with a home loan application.
Further reading
How to deal with debt
Why saving beats debt every time
Sources
Debtbusters: Separating good debt from bad debt
The Banking Association of South Africa: Integrated Report 2024
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