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Why your credit score is so important right now



South Africans are rightly concerned about their finances right now, but it’s vital that you don’t cancel your insurance or default on your insurance premiums, cautions Wynand van Vuuren of King Price.

This will not only put you in a difficult financial situation if something valuable is damaged or stolen, it’ll also affect your ability to get insurance, or any form of credit, in the future, as your credit score will be impaired, he said.

Don’t just stop paying. Bad credit decisions can come back to haunt you later. But, there are several things you can do to make sure you pay the lowest premium possible, especially during lockdown.

“Talk to your insurer now and make a plan in the short term, rather than suffering long term consequences,” said Van Vuuren, who is a partner of customer experience at the insurer.

Defaulting on your insurance premiums will see you being reported to the credit bureau for non-payment, which will negatively affect your credit score.

A credit score is a 3-digit number that helps lenders evaluate how safe or risky you are as a customer.

It’s based on the information contained in your credit report, which is a history of all the loans and credit you’ve ever taken, and how you’ve paid them back, as well as how reliable you are with your other monthly payments.

So why does your credit score affect your insurance premium?

King Price noted that insurance companies use a range of factors to assess your risk and determine the premium you will pay.

For a car, these include the security measures where you park your car; the age, make and model of the car; your age and driving history; your accident and claims history – and your credit score.

“You may not realise it, but your credit score is a powerful predictor of your financial behaviour. It shows lenders and financial institutions how likely you are to pay your bills and default on debts,” said Van Vuuren.

“As such, when it’s combined with other factors, it tells an insurer how risky you would be to take on as a client, and this risk will be reflected in your premium.”

According to insights and data company TransUnion, the biggest influence on your credit score is your account payment history – that is, how you manage your accounts and whether you make the monthly payments on time.

To improve your credit score, focus on paying the full instalment of every bill on time, so you’re offsetting past negatives with more recent positives.

It also helps to maintain a healthy mix of credit – store accounts, credit cards, a home loan, and service contracts such as cell phone accounts – to establish a good credit history.

The bad news is that a negative credit score can take two years to fix, King Price said.

Many pay little attention to their credit score until it’s too late

South Africans are able to access one free credit report every year from the four consumer credit bureaus, noted Kriben Reddy, vice president of TransUnion Africa’s consumer division. He said that just 9% of the 25 million credit-active South Africans, actually access their credit report annually.

Regularly checking one’s credit report and credit score should be part of every South African’s personal financial habits.

“This will inform a person of their credit status, their personal payment history and, of course, the ability to acquire credit when it is needed,” said George Roussos, chief operations officer at African Bank.

He said essentially a credit report is a record of your credit history and payment behaviour and reflects a six – 24-month view on how you pay your accounts. Credit bureaus then calculate your credit score from this as a three digit number to explain your credit behaviour. “Generally, the higher your score, the better,” said Roussos.

With South Africans facing increasing financial hardship, this is a good time to consider your credit worthiness. The lockdown has impacted many South Africans’ earnings – and that can make it tempting to default on payments or to apply for more credit to tide you over.

“But these and other actions may negatively affect your credit score going forward. And that’s important, because you may reach a stage where you have to apply for, say, a loan to fund yours or your child’s education. If you haven’t checked on your credit score first, your application may well be rejected,” said Roussos.

He said one cannot under estimate the value of a good credit score. “It’s your ticket to better interest rates on a loan and being able to plan ahead knowing that you will qualify for some form of credit.”

According to weekly research being conducted by TransUnion, week 2 results (week of 13 April) show that when compared to a week ago, more South Africans are being negatively impacted financially (81% vs 79% last week). On average respondents said they will be short about R7,000 in the near future and expect to run into a shortfall between two to four weeks from now. 88% are concerned about their ability to pay bills and loans.

And yet, said Roussos, “finding a way to service these bills is essential if consumers are to maintain a high credit score.” Roussos says it is a vital piece of information if potential lenders consider before they decide whether or not they will give you credit.

Read: Coronavirus workplace ‘inspections’ to continue in South Africa until the end of the year

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Evicted California renters at greater risk of getting COVID-19



After 70 years in Monterey County, 87-year-old Mary Martinez moved in the middle of a pandemic, evicted from her modest one-bedroom, second-floor apartment at 1118 Parkside St. in north Salinas.

According to her former landlord, Martinez was evicted because she allowed a “violent man” to live with her, violating the conditions of her lease. Martinez said the man is her epileptic nephew.

Advocates say that while evictions like Martinez’s are rarer during the pandemic, landlords are feeling the financial squeeze. Some have sold rental properties to make up for lack of income. That can leave renters out in the cold when their new landlord raises the rent by hundreds of dollars or requires all renters move out before they take over the building.

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New program to help Black-owned online businesses | Technology



ATLANTA _ Many Black entrepreneurs struggle to get bank loans and professional help to launch new businesses. A new program aims to remove those stumbling blocks.

An Atlanta nonprofit and another business have committed $150 million to the 1 Million Black Businesses effort, which will make loans and provide financial and business advice to Black-owned startups and established small businesses. Atlanta-based nonprofit Operation Hope, which helps consumers improve credit scores, is kicking in $20 million, and Shopify, the online e-commerce is adding another $130 million for the loans and website-hosting services.

Other services firms providing expertise or help include Aprio, an Atlanta-based accounting firm, and First Horizon Bank.

It’s a package of products that many Black entrepreneurs couldn’t get through a bank or credit union, said John Hope Bryant, CEO of Operation Hope.

“A bank won’t lend you money unless you can prove that you don’t need it,” Bryant said. “That’s especially true with minority-owned small businesses.”

Small businesses with Black owners were half as likely to obtain business loans as whites, according to a Federal Reserve survey published earlier this year.

The initiative is the latest effort to help Black consumers and businesses enter the financial mainstream. Earlier this month, a group that includes rapper Killer Mike opened a digital bank aimed at Black and Latino consumers.

Banks and credit unions have tried for years to help Black consumers open checking and savings accounts. The efforts helped, as the number of U.S. households without bank accounts fell to 5.4% in 2019 from 6.5% in 2017, the Federal Deposit Insurance Corp. said Monday.

Consumers who own checking and savings accounts typically have access loans with better rates and a wider variety of financial services.

The federal government’s $660 billion loan initiative for businesses hit by COVID-19, the Paycheck Protection Program, also helped few Black-owned businesses, Bryant said. PPP loans were based on a company’s number of employees and its rent obligations. many Black-owned small businesses typically didn’t have enough workers to qualify and are based out of the owner’s residence.

Bryant said a bad credit history may not prevent applicants from receiving a loan.

He hopes more companies will contribute services such as insurance advice or software typically available only to well-established businesses.

Bryant noted that 1MBB is not a charitable organization, as participating companies like Shopify will likely get a pipeline of new business customers through the program.

“This is not pure philanthropy,” he said. “Shopify believes that Black-owned businesses are good businesses if they’re properly supported.”

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This Week’s Top Car Deals & Analysis – October 30, 2020



The final days of October offer a chance to take advantage of outstanding model year-end deals. Most offers end November 2, which means there isn’t much time left to enjoy this month’s best lease deals and deepest new car discounts. We even found incentives that can help those with bad credit buy a new or used car.

2021 car deals. Interestingly, 2021 new car incentives are showing some surprises. For example, Audi is already offering up to $12,000 in savings when leasing the 2021 e-tron all-electric crossover. We even learned that the new Genesis GV80 SUV will debut with a $589/month lease deal plus special financing rates.

Believe it or not, the 2021 Hyundai Veloster N could prove to be a great value despite a nearly $4,700 price increase compared to the previous year. That’s because our analysis finds that better incentives can make it just $10/month more expensive to lease than the 2020 model. Talk about getting more for your money.

Why are small cars bad to lease? Even though smaller cars typically come with lower price tags, that isn’t always the case when leasing. A mix of lower discounts, worse residual values, and smaller discounts can actually make a Nissan Altima cheaper than a Versa despite having an almost $10,000 difference in MSRP.

Shorter-mileage leases. More brands are offering shorter mileage allowances on car leases. Although this is typically used to offer consumers more flexibility, we’ve found cases in which you can end up getting less for your money. If you don’t read all the fine print, this could make comparison-shopping difficult.

Bad credit car deals. If you have subprime credit, you may find it harder to get financed. However, some manufacturers are offering special incentives to help make cars & trucks more affordable. For example, Chevy is offering $2,000 in down payment assistance plus 9.9% APR for 72 months on the 2020 Trax.

$0 down leases. If you’re adamant about now putting down any money on a lease, you’ll love Sign & Drive leases. In addition to requiring no money down, $0 down lease deals can cover your first month’s payment. Even hot sellers like the Honda CR-V Hybrid offer $0 down and as little as $330/month on a lease.

The high cost of safety? Even though most major automakers are offering more safety features than ever before, our analysis finds that the highest IIHS safety ratings still require costly options in 2020. That’s starting to change, but the cost of buying a car with the most bragging rights is still very high.

Disaster relief. Those affected by some of this year’s natural disasters should be aware that automakers are offering assistance. California wildfire assistance programs like Ford Employee Pricing can save thousands when replacing a car. Similarly, a 2020 hurricane relief program from GM offers $1,000 in savings.

Spooky loan situations. There are some scary scenarios you can avoid when getting a car loan. However, boosting your credit score is possible with some determination because negative items on your credit report fall off after 7 years. Our network of dealers is specially equipped to help those with bad credit.

Upcoming vehicles. Genesis finally revealed the new GV70, a small luxury crossover based on the highly-rated G70 sedan. Whether it’s a redesigned car, truck, or SUV, odds are you’ll find it on our Previews page. That said, as we reported last week, discounts ahead of a redesign can result in substantial savings.

This Month’s Cheapest Lease Deals »

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