As a young adult who will probably want to make a big purchase one day, you have to build your credit profile. This proves to banks that you are a trustworthy debtor who will pay them back if they lend you money. So, how do you build your credit profile?

I’m no financial expert, but let me share some tips based on my personal experiences and those of the people around me.

Use a responsible lender for your credit needs

The first, unbreakable rule of getting credit is: ‘Use only registered financial services providers.’ That way, you’re protected by the Consumer Protection Act that forbids irresponsible lending, governs maximum interest rates and ensures you’ll be told all the costs of your credit clearly upfront. It’s much safer than dealing with unregulated lenders.

Also, registered lenders like banks have scorecards and policies that can assess you for products like credit cards when you don’t have a credit profile yet. Securing a credit card is one of the best ways for people with no credit history to start building a healthy credit profile.

One benefit of a credit card is help in a financial emergency. Another is cash-free, day-to day shopping. You can use your credit card to buy retail goods without any service fees, and if you pay off the full amount at the end of the month, you won’t be charged interest on most purchases. Remember, though, that the interest-free grace period doesn’t apply to fuel purchases, cash withdrawals or account transfers and some other services like mobile bets and lotteries. It’s best not to use your credit card for those transactions.

Credit is often perceived as a bad thing, but I disagree

Make sure you get the right credit card for you; one that you will be able to afford. Banks offer different credit cards to suit different affordability levels – like the Nedbank Gold Credit Card for those earning from R5,000 a month. It has low interest rates and a monthly fee from R40, helping you afford more.    

Make sure you keep a good payment history

Once you have started your credit journey, it’s important to make sure that you keep it positive. Your payment history is the most important part of your credit score. Every time you pay your debt on or before the due date, that impacts your score positively. Late or missed payments do the opposite. So, remember to pay your bills on time – it will do good for your credit score.

Don’t miss payments

Some months are better than others, so while it’s normal to have financial ups and downs, try to make sure that you don’t miss any payments. If you’re struggling to repay your debt each month, it’s important to talk to your creditors and try to negotiate a new payment plan. This won’t only limit the load on you each month, but it will also help you keep a healthier credit score.

Keep a close eye on your credit score

Use a reliable credit bureau regularly to monitor your credit report. This will help you pick up any fraud or incorrect information on your credit report. If you’re a Nedbank client, you can check your credit score for free any time you like, and get tips on how to keep it healthy, on the Nedbank Money app.  

Credit is often perceived as a bad thing, but I disagree: it’s actually a way of life in this modern world. Without it, many of us wouldn’t be able to buy cars or houses. Taking steps to build your credit profile can help set you up for financial success.