Money Advice

How to start borrowing if you never had credit before

Published by
WIlliam Dube

We don’t wake up with a credit score and begin tracking it; rather, we begin with a credit score of 0. Borrowing money requires a credit score, but you can still get a loan for yourself or your business with a 0 credit score.

A credit score of 0 indicates that you have never borrowed before and thus do not have a credit history. However, lenders are willing to lend based on income if a person does not have a credit score.

The reason you don’t have a credit score

Not having a credit score does not automatically imply that you are a bad debtor. It means that credit bureaus have no information about your credit history. Here are a few reasons why you don’t have credit.

1. Didn’t use any credit facility in the last 24 months

There will be no activity on your credit profile if you have no active accounts for 24 months. Credit bureaus calculate your credit score based on your credit history. The credit bureau’s algorithm will render your credit profile a doormat if there is no credit activity on your profile, awarding you a 0 credit score.

Credit inquiries are removed from your credit profile after 12 months if there is no credit activity in your credit profile. Keeping an active account, such as a store account that you use on occasion, can help you improve your credit.

2. Having no credit with a registered credit provider

Another reason you might not have a credit score is that you haven’t borrowed from a registered credit provider. Credit inquiries, defaults, payments, and other credit information are reported to credit bureaus by companies registered with the National Credit Regulator (NCR).

You will not have a credit score if you have never borrowed from a registered bank, a store that offers credit, or a credit card issuer.

3. If you are an immigrant

You will not have a credit score if you are an immigrant or are in South Africa on a permit. This does not, however, imply that you will not have a credit score in your home country. Since your credit score will not be transferred to South Africa, you will have to start building your credit score from scratch by borrowing from a South African source.

If you have a permit, you can take out credit and improve your credit score. Begin with a credit facility that requires a low repayment amount and a short repayment period.

The type of credit to start with if you don’t have a credit score

You can qualify for any type of credit without a credit history, but not all credit is suitable for you. Borrowing for those without a credit history is primarily determined by their income level. The higher your level of income, the more likely you will be considered for large loans.

Since you qualify for nearly every loan in South Africa, taking out a loan that does not help you build your credit score will not benefit you. Furthermore, you should avoid taking out a loan that will be difficult to repay. You need something within your financial means.

Maintaining a budget is something you must do. Include the amount that must be repaid each month, including interest and fees in your budget, and consider whether the expense is justified.

Here are some of the credit options that you should consider:

Vehicle finance

When starting a new job for convenience, you may require a motor vehicle and a motor vehicle finance may be the best option for you. This is not a bad way to start a credit profile. It is critical to obtain the appropriate amount of credit. Consider more than just the amount you must repay for the vehicle purchased on credit. Consider the cost of insurance, fuel, and the excess premium.

Home loan

Many South Africans take out a home loan without first obtaining another type of loan. This is a loan that you can obtain without a credit history, and it is one of the most reasonable loans to take because you will own an asset that appreciates after you pay it off. Other costs to consider when getting a home loan include municipal rates, security fees, taxes, insurance, and home maintenance.

Personal Loans

A personal loan of up to R300,000.00 can be obtained with a credit score of zero. Personal loans can be applied for either online or in-person at a bank branch. Banks will charge you a high-interest rate because you do not have a credit history.

Revolving loans

You can begin borrowing with a revolving loan, such as a credit card or store credit. This is arguably the best way to build a credit score and assess your financial management skills without severely impacting your credit score.

Type of credit to avoid if you don’t have a credit score

There are some types of credit that will not help you much if you want to build a credit score and have no credit at all. You can use these types of credit in the future but not when trying to build your credit score. You should avoid the following types of credit:

Buy Now Pay Later

These loans are becoming more popular in South Africa, and some of them do not require a credit score. These loans will do nothing to improve your credit score. Businesses that provide these loans may not conduct a credit check, and the loan may not be reported to credit bureaus.

You can use this loan if you want to make online purchases and pay in two or more installments over the course of two months. As a result, use this loan type for convenience rather than to improve your credit score.

Payday loans

Payday loans may necessitate a credit check and must be repaid in a short period of time. They also come with a high-interest rate. Payday loans are only good for short-term borrowing, so they won’t help you much. To build a credit score, choose longevity, and loans with longer repayment periods should be prioritized.


You can start borrowing with almost any credit store if you don’t have a credit score. For the first time, you will be assigned the task of managing your credit officially, with your credit history closely monitored. Keep track of your borrowing expenses and make sure you repay your credit card on or before the due date.

WIlliam Dube

William Dube is a finance and economic news expert with over 10 years of experience in economic anaylsis, financial product assessment and market analysis. With a numerous certificates from prestigious universities including but not limited to Yale University and the University of Pennyslivenia. William specializes in providing insightful news developments in South Africa and commentary on investment strategies, risk management, and global economic trends. You can contact him on

Published by
WIlliam Dube

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