Why is it so important to have good credit history, especially if I don’t see myself taking any loans in the near future?

Having a good credit record doesn’t just mean being able to get a loan. A good credit rating also allows you to access further credit when you need it, as, at some stage in your life you’ll need to finance a car; rent an apartment; get a mortgage; or set up utility accounts. It can even be helpful in getting a job.
Ideally you would need to own some assets – for banks to use as surety should you renege (fail to meet your repayments) on the loan contract.
But all is not lost if you haven’t established a credit record yet, or if you have a poor credit rating; it won’t mean you can’t perform any of the aforementioned activities — but you will certainly find it more difficult.
So how do you go about it? To build up a good credit record, there are several basic steps you can take, including opening a basic cheque or a savings account. It is a convenient way to pay your bills and is particularly important to potential landlords who expect to receive rent each month.
Although it is highly subjective to your spending habits, it’s good to have a manageable number of retail store accounts (Edgars, Clicks, Woolworths, and similar). Naturally, how you manage these accounts affects your credit rating.
When you feel ready to apply for credit, you can ask a family member or trustworthy and credit-healthy friend to co-sign a loan for you. Making regular payments shows creditors you are a responsible credit consumer. So after six months to a year, you may be able to apply for credit on your own.
Once you’ve established a good credit history, it’s very important you keep it that way. Paying your bills on time is the single most important factor in maintaining good credit.
The worst- case scenario is being listed with the ITC as a slow payer, or being blacklisted! Should that happen, you’ll battle to open even a simple postal account.
To avoid being blacklisted, don’t over-extend your credit; use your store and credit card, if you have one, for emergencies only.
Lastly, practice the simple exercise of watching your debt-to-income ratio. Your debt-to-income ratio is basically your regular monthly bills (excluding rent or mortgage and utilities) divided by your gross monthly income. If your debt-to-income ratio is between 20% and 30%, you need to take a hard look at your finances.

If you already have accounts and are still uncertain about your credit history, visit http://mytransunion.co.za to view your credit report.