Wellness at work is a increasingly dominant theme in any discussion about the workplace but for many it’s a broad buzzword without much science behind it.

But Linda Trim, director at Giant Leap, says that thanks to a new research project called Wellness Together carried out by Sapio Research and that included 1 000 respondents, it is clear that productivity, creativity and profitability can be affected by employee conditions.

“The survey provides evidence of strong correlations between people feeling good about their workplace and a positive outcome for business. To achieve true ‘wellness’ attention must be given to every component that can impact mental and physical health.

“This means building structures, company cultures and of course also furniture and fittings because all these factors fit together and are important to people and the businesses they work for.”

Trim notes that the survey evaluated 6 key attributes of wellness in the workplace:

1. Movement

Musculoskeletal problems, namely those related to the back, neck and upper limbs, account for the second biggest reason for absenteeism from the workplace – after colds. “High performing companies are more likely to have facilities that allow people to adjust their work station to best suit them. This can mean anything from the height of the desk to having the option to sit or stand while working. It is important to move around and change environments every so often. This helps prevent dips in concentration, and could help prevent back and neck problems.”

2. Lighting

Harsh or overly bright lighting is considered a far greater distraction for employees that low level or soft lighting. “Yet lighting systems that have the ability to change their colour tone as the day progresses are the least common features in an office,” Trim notes.

“Having glare control and variable lighting is found to be a strong characteristic of more profitable businesses. Human-centric lighting is a major benefit to the most successful organisations.”

Lighting that responsive to circadian rhythms is the next major trend expected in lighting technology.

3. Personal storage

The survey revealed that personal storage at work is a contentious issue. “Increasingly people are bring more things, and often more expensive things, to the workplace,” says Trim. “Gym gear, tech, and sometimes cycling gear all needs to be stored somewhere throughout the day. Banks of personal lockers are becoming a standard facility in big cities overseas and we expect that trend to catch on South Africa too.”

Trim added that the survey also showed that despite the trend towards hot desking, the majority of people in study (53%) stilled wanted their own desk. “But these days fewer people have their own desks. But giving all employees – whether permanent or mobile – individual storage, as well as providing office storage, will help them maintain a sense of control, belonging and a sense of well being.”

4. Noise and acoustics

Shrieking laughter, loud conversations and traffic are distracting. And being listened to on the phone is annoying.

“Providing quiet working spaces is one of the most important characteristics of companies that consider themselves to be innovative, creative or simply focused,” says Trim. “Quiet work spaces are one of the biggest differentiators between high and low performing companies according to the survey.”

But Trim also notes that is also important for businesses to offer areas where staff can talk openly and discuss ideas. “Having the choice is extremely important.”

5. Air quality

Not only is fresh air the single most successful way in mitigating dips in concentration, but the survey showed it to be one of the most differentiating factors of the most productive and innovative companies. “Good quality ventilation and air movement is therefor a vital characteristic of a healthy office,” says Trim.

6. Staff empowerment

“Companies can make their staff feel empowered in a host of ways and this can have significant outcomes for business,“ Trim notes.

“The act of consulting with staff, and letting them have a say on their environment, is a major differentiator between high and low performing companies. This suggests that consulting with employees on issues of importance will lead to greater profitability.”

Trim cautioned however that employees won’t necessarily choose the factors that are prevalent in profitable companies without guidance and awareness of the implications of different choices. The role of an expert guiding staff choice is therefore essential.

In today’s retail and shopping centre landscape, it is becoming increasingly difficult to compete for consumers’ attention, says Steven Burnstone, CEO and head of analytics for Eighty20 Consulting

Standing out and being attractive to consumers is not impossible-all it takes is an understanding of your customers.

Burnstone says that understanding one’s customer base is key. “The way businesses communicate to customers is one of the many areas that need to be focused upon. Businesses need to shift away from traditional, product-focused advertising models and focus on delivering advertising and promotional messages that are customer-focused and tailored to specific individuals.”

Burnstone shared invaluable insights at the eighth annual South African Council of Shopping Centres’ (SACSC) Research Conference on 9 May 2018.

South African customers are members of multiple programmes, receiving countless marketing messages across all channels. How can retailers set themselves apart and be heard in this competitive environment? Big data and artificial intelligence is enabling retailers to speak more accurately to customers and better understand what marketing strategies work best to drive feet in stores and grow customer satisfaction.

Customer behaviour changes achieved by promotional campaigns and loyalty programmes can be assessed.

“In highlighting the data required, methods used and the common problems encountered, we can uncover some of the nuances of customer behaviour change and what to look out for. We can look at some of the insights gained from these analyses and see how they can be used to systematically optimise these campaigns and programmes.

“These can improve the efficiency of marketing to customers, through personalised targeting of messaging and communication channel.”

By Ivan Israelstam, chief executive of Labour Law Management Consulting 

South African labour legislation gives employees a plethora of rights against the employer. So much so that many employers wonder whether the resultant burden on them makes it worth continuing to run the business.

For example, employees have, amongst others, the right to:

• Join trade unions
• Go on strike
• Procedural fairness at disciplinary hearings
• A fair reason for dismissal
• Protection form unfair demotions
• Be promoted under certain circumstances
• Minimum wages in many cases
• Sick leave, holiday leave, maternity leave and compassionate leave
• Overtime pay
• Consistent treatment
• Protection from unfair discrimination
• Representation at CCMA by a trade union representative

On the other hand, labour legislation gives employers few rights; and those that they do have are very restricted. That is, employers may exercise limited rights as long as, in doing so, they do not infringe the numerous rights given to employees.

However, one area that employers can exercise their rights is that of fiduciary duty. This means that the employee has, in certain ways, the duty to put the employer’s interests first. This does not mean that the employee must, as a way of benefiting the employer, forfeit his/her rights to leave, legal working hours or fair discipline. It does mean that the employee may not advantage himself/herself unfairly at the expense of the employer.

Specifically, this means that the employee may not:

• Place him/herself in a position where his/her interests conflict with those of the employer
• Make a secret profit at the expense of the employer
• Receive a bribe or commission from a third party
• Misuse the employer’s trade secrets
• Give a third party the employer’s confidential information.

While this principle applies generally to employees it applies more strongly to senior employees. In deciding on the extent of fiduciary duty that an employee has the courts consider a number of factors including:

• The degree of freedom that the employee has to exercise discretion in making and executing business decisions
• The opportunity for the employee to exercise this discretion in his/her own interests
• The extent to which the specific circumstances open the employer to abuse of the employee’s discretion
• The extent to which the employer relies on the employee for expertise and judgement in conducting the business
• The extent to which the employee is in a position of trust.

Clearly, the more junior the employee the less these fiduciary factors are likely to prevail. That is, with some exceptions, junior employees normally do not have the right or duty to make crucial business decisions or the opportunity to misuse decision-making power.

The line between who is a senior employee and who is not and the line between who is in a position of trust and who is not are blurred. Whether, for example, a junior salesperson is in a position of trust or not depends on the specific circumstances of each case. Therefore, in order to protect itself from employees acting against the employer’s interests every employer should:

• Build in checks and balances that prevent the abuse of power
• Inform all employees of their fiduciary duties in relation to their positions of trust
• Make sure employees at all levels know the seriousness of breach of their fiduciary duties
• Take swift, fair and consistent action against employees who breach their fiduciary duties
• Obtain expert legal advice before acting against suspects.

Co-working: the new normal

Co-working spaces, shared office spaces that are typically used by the self-employed or those working for various different companies, are soaring in popularity the world over.

“So much so,” said Linda Trim, Director at workplace design specialists Giant Leap, “that working in a co-working space is rapidly becoming the new normal even for those who have traditional 9 to 5 jobs.”

Trim noted than there are currently 14 411 co-working spaces around the world today making it fastest growing type of commercial property. Globally, shared workspaces have grown at an rapid rate of 200% over the past five years. In global cities like London, New York and Chicago they are expanding at an annual rate of 20%.

“Co-working places are rapidly becoming the workplace of choice. Globally they are expected to be close on 4-million people who will be members of a co-working office by 2020 and that number is expected to rise to over 5-million by 2022.”

Trim added that in South Africa the trend is not as developed as it is in countries like the US, but is quickly catching on. “In major business nodes like Sandton for example, co-working places are springing up all over. For instance FutureSpace is a high end co-working space that is as appealing as WeWork, the hugely successful American co-working company that has offices in 21 countries.”

Co-working became an attractive concept because when it first started to appear, it countered the negative views of the traditional office of drab interiors with tired people spending their lives in cubicles under harsh neon lights.

“If we look back to just a few years ago, co-working was considered to be a movement or a trend, with many believing it would fade. But now co-working is a full-blown industry that is disrupting the real estate industry and the way people work.

They known for offering environments that are conducive to innovation, collaboration, and productivity. These type of workplaces were pioneers in implementing a human approach to design, a trend which is catching up among real estate developers, landlords and of course companies.

“For now co-working is today’s normal.”

The extent to which co-working has gone mainstream is evidenced in the fact that large companies are increasingly seeking to enhance the workplace experience as a means to attract and retain talent, and that a significant percentage of workers who have the option to work from home or a coffee shop prefer to work from a co-working space.

Said Trim: “By 2020, we expect 50% of large companies to have some form of shared office space to offer their workers.”

She also noted that co-working spaces were having a very positive impact on people. 84% of people who use co-working spaces are more engaged and motivated while 89% who co-work report being happier.

“The co-working phenomenon has also spurred companies to make their existing offices much more people friendly and relaxed,“ Trim noted.

“On many of our briefs now we are told to design something that makes people feel they are in a relaxed environment somewhere between a coffee bar and their lounge at home.”

She added that the growth in co-working spaces will likely remain strong with a forecasted growth rate of 15% over the next 5 years.

By Tehillah Niselow for Fin24 

Thousands of workers are expected to take to the streets on Wednesday for a one day strike as the South African Federation of Trade Unions (Saftu) plans to make the country “ungovernable”.

The federation marched to parliament on April 12 and handed over a memorandum of demands but they say that the response did not address their concerns and workers will embark on nationwide action to put pressure on members of parliament to reject several labour bills making their way through parliament.

Saftu, led by dynamic general secretary Zwelinzima Vavi, was formed exactly one year ago.

Fin24 took a closer look at their plans for the general strike.

When: Wednesday 25 April 2018

How: Section 77 of the Labour Relations Act (LRA) allows workers to undertake protected strike action to promote their social and economic interests. Saftu’s application to the Section 77 Sub-Committee of the National Economic Development and Labour Council (Nedlac) was unsuccessful but three trade unions affiliated to Saftu; NUPSAW, ICTU and Salipswu made a similar Section 77 application to Nedlac and it was granted.

On Wednesday, all employees, regardless of whether they are Saftu members or non-unionised may join the strike under the ‘no work, no pay principle’.

Who: According to unaudited figures, Saftu has 800 000 members. The largest affiliate is the biggest trade union in SA, the National Union of Metalworkers (Numsa) with approximately 300 000 members, mostly in the manufacturing sector.

“We want everyone to join, in particular appealing to rank and file members [of other unions], many of them will be disgusted that their leaders voted for the [labour law] changes, without a mandate”, Saftu spokesperson Patrick Craven told Fin24.

Where: Saftu is expected to announce the nationwide routes at a press conference on Monday.

Why Saftu is taking to the streets

1. Labour law amendments

Parliament is currently considering amendments to the Labour Relations Act‚ the Basic Conditions of Employment Act‚ and the new National Minimum Wage Bill.

“Various amendments to labour laws will make it incredibly difficult to strike, it’s already quite difficult,” Craven said.

He said that the new labour bill making its way through parliament will include more rigorous requirements for pre-strike balloting and that this will be difficult for smaller unions with limited funds.

Craven added that the proposed amendments to the LRA will also allow for the Commission for Conciliation, Mediation and Arbitration (CCMA) to intervene in strikes deemed to be lengthy and/or violent.

2. Minimum wage

Saftu objects to the R20 an hour minimum wage agreement, which was set to be implemented on 1 May but has since been postponed due to lengthy parliamentary processes.

“We want a living wage, we haven’t set a specific figure [but] we were very impressed with Marikana Lonmin workers who wanted R12 500. R20 is an insult to their memory,” Craven said.

The Parliamentary portfolio committee on labour said on Friday it will refer the National Minimum Wage Bill back to the labour department to be redrafted so that it includes public input received by the committee.

3. Nedlac membership

Craven said that the nationwide marches on Wednesday “are linked to the campaign to be recognised by Nedlac”.

Saftu remains in the cold, outside of Nedlac, the forum which negotiated the minimum wage and the labour law amendments between the three other union federations, government, business and the community sector.

Requirements for Nedlac membership include audited membership figures and financial statements.

Saftu maintains it does not have these yet as the federation was only formed a year ago and the admissions procedures at Nedlac are too onerous.

Who will not be part of the general strike?

Cosatu – the Congress of South African Trade Unions spokesperson Sizwe Pamla said that while they agree with Saftu that the R20 per hour minimum wage is inadequate, it’s a starting point to improve workers’ lives and the figure is what the “South African economy could give us”.

Pamla added that the amendments to the LRA do not represent a dramatic change to the labour landscape as they were already provided for in the legislation, they just weren’t enforced.

At loggerheads since the formation of Saftu in April 2017, Pamla said that they have good working relations with the two other federations at Nedlac, Fedusa and Nactu and need to work with Saftu in the future.

Nactu – the National Council of Trade Unions general secretary Narius Moloto said that the federation believed that the minimum wage is “historic” as it will benefit 40% of workers, currently earning below R20 per hour.

With regard to amendments to the labour law, Moloto said they will not make embarking on strike action more difficult; “we don’t really understand what they’re protesting about”.

Fedusa (the Federation of Unions of South Africa) general secretary Dennis George said that the organisation won’t be joining the strike as the minimum wage was negotiated with government. He added that 4,5-million workers will be covered by the R20 per hour salary and this will be “a huge benefit to the country”.

Offices don’t just have an aesthetic impact on us: we are also influenced by how we sense sound, touch and smell at work.

“Together, the perception of all these senses help or hinder our ability to focus and concentrate. And this is particularly true of sound in the workplace,“ said Linda Trim, Director at workplace specialists Giant Leap.

“Everyone has had the unhappy experience of trying to get something important done when colleagues are making a lot of noise.

“Loud noise has definitely become one of the greatest irritants at work.

“Studies by architecture firm Perkins & Will showed how important workplace acoustics are to performance and satisfaction, and that good acoustic design equals good business.

“In 2016 it showed statistically significant changes in creativity scores associated with different acoustic conditions,” Trim notes.

Workers reported that they were more creative when office noise was masked “white” noise. A 2005 study on office noise and employee concentration by Banbury and Berry, showed that 99% of employees reported that their concentration was impaired by various types of office noise, especially telephones left ringing at vacant desks and people talking in the background.

“Interestingly researchers also found no evidence that people become used to these sounds over time. So people don’t just get accustomed to noisy offices, they are consistently bothered. And in extreme cases it can cause them to resign,” said Trim.

According to another study by Witterseh et al on the effects of noise distraction in the workplace, 68% of those surveyed become frustrated when sound levels creep just above normal conversation, and they also reported increased fatigue and difficulty in concentrating.

Says Trim: “Often the reason why background sound distracts us is because we try to work out which sound to focus on, and what sounds to ignore. If nearby speech is not relevant to your team or your work, it becomes even more distracting.”

To increase concentration and in the workplace, Trim said that companies should pay as much attention to acoustics in the office as they do aesthetics to create a productive workspace and keep employees happy.

“For example, introducing white noise in all areas will mask all conversations, so it needs to be applied strategically. Office spaces that have variety of individual, small group, and collegial areas can help the issue, especially when un-assigned seating is enforced so individuals can choose where they wanted to work according to their chaning attentional needs.”

Trim adds that increasing numbers of South Africa companies are also installing sound proof booths so people can make calls without disturbing others.

“Today there are many advanced, affordable products to be used in placing acoustics in the office such as light fittings, suspended ceilings, wall coverings and office furniture. Using materials that absorb sound is key. Carpeting, screens or walls covered in fabric, acoustical panels or drop ceilings with acoustical tiles can help neutralise sound issues,” Trim concludes.

Ideas are the new currency of modern economies and it is no more evident than in recent billion dollar idea success stories like Airbnb and Uber which are now disrupting established industries.

Richard Andrews, MD of Inspiration Office, says: “Increasingly companies are putting emphasis on new ideas to grow their business and stand apart from the competition.

“We live in an ideas age and business are recognising that fact and today’s offices must support the ‘cult’ of new ideas. And in comfort of course.”

These are the biggest office trends expected in South Africa in 2018:

Idea-centric offices

“Because ideas are so important to the new economy in 2018 so we expect to see more idea centric offices that enable creative thinking. Many people think creativity is just for creatives but it should facilitated and encouraged in all aspects the working life because it helps all areas of business,” Andrews noted.

“There is a misconception that creativity is a ‘light bulb’ moment but it’s not. Creativity is really a haphazard, tricky problem solving process that should allow people to work in groups but also alone. Offices should therefore create spaces where people can work in a creativity supporting way.

This year Andrews expects an even greater shift away from traditional ‘battery farm’ corporate workplaces to places that are more like creative studios – that means different kinds of workplaces that offer uninterrupted individual focus, developing ideas in a pair, generating solutions as a group, converging around ideas and allowing time for diffused thinking.

“These different options allow the mind to wander.”

Unconventional work area design

An extension of idea-centric offices is the unconventional work area design.

“These are not just for hipsters working at Google anymore. Unconventional work offices now offer meditation spaces, dressed-down conference rooms complete with sofas, bean bag chairs, vibrant colours, and lots of room for fun, stress busting activities like ping pong or foosball.”

Offices all over the world are adopting these new and unorthodox working and meeting spaces to attract young talent and make working spaces more fun and collaborative.

Home-style comforts

“We are receiving a growing number of requests to make South African offices more  relaxed and people friendly so people don’t feel they are sitting in a such a severe place,” Andrews adds.

Demand for homestyle comfort design is a sign that employers are listening to the desires of their employees and figuring out new, fun ways to get them to stay at work longer. This design trend is all about making offices feel more comfortable or homelike.

Dynamic spaces

Dynamic spaces is another big trend. They are typically defined by lightweight and moveable furniture with wheels, doors to open extra space, moveable green wall dividers and wipe boards or chalk boards. They are moveable, constantly fluctuating, engaging, and can transform from a space for company parties and activities to traditional conference rooms or meeting areas.

Said Andrews: “Dynamic spaces offer the opportunity for businesses to be a lot more creative with their space. Businesses are constantly changing and becoming more flexible, allowing colleagues and staff to try new things in innovative ways.”

Greenery & nature

More a long-standing design principle than a trend, this is not just about adding a few plants here and there around the office.

“This goes much further by integrating nature through the building in the form of textures, patterns, plants and natural lighting. Being close to nature and living plants instills a greater sense of calm in offices. While not new, we are seeing a strong increase in demand for green in the workplace,” Andrews concludes.

Source: Business Matters 

Employees needed 42 hours each to familiarise themselves with their latest software with nearly three quarters of office workers are using photocopiers and nearly half still using fax machines proves paper-reliant office is far from dead.

According to new research from serviced office specialist Workthere, the average UK worker is wasting 50 hours a year as a result of failing technology in the office, which Workthere estimates could result in an £11 billion loss for UK businesses, based on employment data from the ONS.

In particular, the next generation of office workers, those aged between 16 and 24, struggle most with outdated tech, wasting 62 per cent more time every week on inefficient technology compared to their colleagues that are aged 55 or over.

The survey of UK office workers, commissioned by Workthere and carried out by independent research company CensusWide, also found that it took around 42 working hours for an individual office employee to fully familiarise themselves with each new piece of software, which Workthere estimates equals around £830 worth of a professional employee’s time.

With businesses having introduced an average of four pieces of new software over the past three years, 45 per cent of workers claim that despite their employers’ investment in new technology, they don’t invest enough time into training staff to use it properly.

Cal Lee, founder of Workthere, commented: “With regards to the serviced office market in particular, the first thing we are asked about, after the cost, is what specification of technology will be available for a business to use. The office tech inventory can affect profits as well as play a vital role in the perception of a business, both internally and externally. Gone are the days of just ‘location, location, location’ – in the eyes of office workers, digital connectivity tops the list of innovations that will improve the office working experience in the next few years.”

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Workthere found that office technology can have a direct impact on employee performance and efficiency, with many employees believing that their company’s investment into its office technology is linked to its investment into staff welfare and how it conducts business. The survey results showed that almost half of respondents said a business with cheap office technology is probably not going to invest in the wellbeing of its staff.

In addition, 24 per cent indicated that they wouldn’t be prepared to do business with companies that do not have the most up-to-date office technology.

While the research shows that the paper-reliant office is far from dead, with 73 per cent of office workers using photocopiers and 42 per cent fax machines, it also shows that 42 per cent of respondents use cloud technology for file sharing and 36 per cent have video conferencing capabilities.

Lee continues: “The digital revolution is clearly taking a firm grip of office spaces. We found that connected technology is by far the number one technology that office workers deem most useful to improve the way they work in the next five years, with voice activated tech and wireless charging pads taking spot two and three respectively.

“Whilst different businesses will have different priorities, office tech that works efficiently and improves productivity without proving a distraction, or making staff anxious about using it, is definitely high on the agenda for both staff and employers. It is therefore increasingly important for businesses to know that their office spaces are able to facilitate a smooth tech experience.”

Source: Business Matters

BankservAfrica’s latest take-home pay and private pensions indices show that 2018 is off to a good start, with growth experienced in both nominal and real terms.

The BankservAfrica Take-home Pay Index shows average formal sector pay was R14,675 in January 2018, 5.8% higher than January 2017 before inflationary adjustment.

This increase was lower than December’s growth of 7.3%. However, when adjusted in line with inflation, take-home pay increased by 1.2% on a year-on-year basis, and represents the slowest increase in five months.

“This positive real increase for money banked by employees’ points to a gradual increase in living standards for most formally employed people,” said Mike Schüssler, chief economist at Economists dot coza.

The typical formal employee experienced a real increase of 2.2% – nearly double that of the average take-home pay increase.

The share of employees who receive up to R4,000 per month declined to 13.7% in January 2017 compared to 15.2% in January 2018. This is a 7.8% decline in the number of employees receiving less than R4,000 per month over the last year.

Those earning monthly salaries between R12,000 and R1,000 now stand at 474,000 people, which is more than the 436,900 who earn below R4,000.

While the number of employees taking home between R12,000 and R16,000 only grew by 1.2% , this number is still higher than the number of earners in the low-income category.

A quick review of the salary index shows that the real increase average was 1% more than in 2016, the group said.

Real take-home pay declined in the first two months of the year and then gradually increased. In the last three months of 2017, take-home pay increased by 2.8% on average after inflation.

Source: Business Tech

How to calculate your credit score

An excellent credit score is one of the most priceless assets a potential home buyer can have. This tool has the power to secure favourable mortgage and refinancing rate, influencing everything from the size of the loan repayment to the interest rate on the home loan.

“It is advisable that potential home buyers check their credit score before even starting to look for homes or applying for a home loan, as the banks will look into your financial history and the application will be declined if you have a low credit score. The important thing is that your accounts are up to date and that you have the ability to afford the bond,” said Craig Hutchison, CEO Engel & Völkers Southern Africa.

South Africans are entitled to a free copy of their credit record every year.

“Many South Africans are surprisingly unaware of the importance of a good credit profile, many do not know what a credit profile even is, and even if they do, they seldom check their own personal credit profile. Today many potential employers look at credit profile reports as a way to judge a person’s character and level of responsibility,” said Mellony Ramalho, group executive African Bank.

Your credit score is typically a number from 0 to 999 and is calculated by using all the details on your credit profile. “It reflects a ‘score’ summary of all your financial decisions, it is often used by lenders, such as home loan and personal loan companies, to make accurate decisions on whether they should lend to you or not,” said Michael Bowren, CEO and founder Fincheck.

Overall, a credit score measures the amount of potential risk the consumer is to the creditor.

How does a credit score work?

The higher your score the better your credit health will be, which will be an advantage when applying for a home loan, making it easier for you to borrow money at lower interest rates.

“The lower the score, the higher the risk which then influences the outcome of the credit application,” advises Andile Fulane, CEO, Seed of Prosperity.

By managing your credit profile effectively, you can ensure your image and profile is viewed favorably by lenders or other organisations. A bad credit score would mean the exact opposite of this and result in almost no financial institution willing to offer you a home loan.

How do they calculate your credit score?

Your credit score is calculated by a credit bureau based on your credit report. They consider how you pay your bills, how much debt you have and more importantly, how all of that compares to other credit active consumers.

Each bureau has a different way of calculating your score and take into account different forms of information, including information their organization already holds on you, or your employment circumstances.

Your credit score is only one part of your credit report although it is almost the single most important item on your credit report; the full report gives you some handy information. Your credit report is a combined summary of your financial background with an overview of your credit score, financial accounts, profile, and rating.

What influences your credit score?

As you start transacting with various banks, retailers and other financial institutions like lenders, you start building a financial history. Your credit history will be determined by the amount of money you have borrowed in your life and how much of it you have diligently paid back on time.

Credit score is affected by the following:

  • Missing payments or not paying on time, even if you make double payment the following month the score will affect your credit history. “While adverse legal information is cleared as soon as the account is settled, the negative repayment history however remains for a couple years,” said Ramalho.
  • Too much debt – how much you owe and how much of your available credit you’re using – it is advisable to try to keep the use of your current credit facilities to less than 35% of your limit.
  • Negative information like a court judgment taken against a consumer’s name (commonly known as blacklisting).
  • Length of credit history.
  • Account application and enquiry activity – within a short period of time, how many account applications the consumer submitted and how many new accounts you opened.

My credit score is lower than I expected. Why is this?

Fincheck provide some reasons:

  • A credit history of fewer than 6 years, which is the time frame used to calculate your total credit score.
  • Missed or late payments over the last 6 years.
  • Holding very few credit accounts means there will be less credit history available on your profile.
  • Court judgments or record of insolvency.
  • Having a lot of unused credit available could lead to a large balance of debt if you decided to use it all at once.
  • Balances on your accounts that are very close to the credit limit indicate that you rely on credit to get through each month.

Why improve your credit score?

Credit providers measure their risk in taking you on as a client before they approve or decline your application for credit, so improving your credit score increases the chances of being granted credit on favorable terms.

How to improve your credit score

  • Regularly checking your credit report to confirm all the details are correct.
  • Making sure you make payments on any outstanding credit accounts on the due date. (Should you have difficulty in making your payments, you should contact your credit provider to agree on a payment plan, or to reduce your regular payments to an amount that you can afford to pay).
  • Consider setting up regular automated payments rather than doing manual payments.
  • If you have too many old, unused credit accounts, consider closing them.
  • If you are almost reaching your credit limit on one or more accounts, try and reduce your balance. Outstanding balances mean you have a lot of outstanding debt in your name.

    How long does it take to improve your credit score?

It depends on how long it will take to improve areas that need attention and maintain them, real improvement will start showing after three months of consistency, as you show progress your credit score will automatically get updated.

If you have had a couple bad experiences with your credit health, it is helpful to know that, credit inquiries stay on your credit report for up to two years, whereas more serious activities that incur namely late payments, lawsuits, bankruptcy and tax liens will stay on your credit record for up to 10 years.

How to build up a credit score if you don’t have debt

Unfortunately you won’t have a credit score if you don’t have any debt because your credit score is calculated and based on your credit habits. This doesn’t mean your financial health is bad, there’s just simply not enough data to give you a credit score.

This can be bad news if you’re looking for a home loan though, so your first steps will be to apply for financial products where you can start building a credit record.

These can include:

  • Credit card
  • Vehicle finance
  • Phone contract
  • Clothing accounts
  • Consequences of a bad credit score

Not paying your account on time or at all which can result in you not getting further or desired credit when needed.

Lenders will see you as a high risk meaning that should they decide to take on that risk, they will charge high interest rates compared to someone with a good credit score.

Depending on what industry you are in – some industries such as banking – check a potential employee’s credit report and score. They consider a bad credit score as someone who is not trustworthy to work in a banking environment.

Consequences of not checking one’s credit score

It is advisable for a consumer to check their credit report every 3 to 6 months. Statistics show that only 3% of the 24 million credit active South Africans have seen and understood their credit report.

This comes as a threat of potential identity theft where someone can use a consumer’s ID to clone their profile and open lines of credit. A credit report contains so much personal information including addresses, phone numbers and employment that the leak of such information poses a big risk of fraud to the individual.

How a credit score affects you when applying for a home loan

When it comes to taking out forms of credit like a home loan, your credit score plays a vital role in your eligibility for a home loan, however it’s not the only factor to affect your application, your debt-to-income ratio will also play a big role.

What score do you need to qualify for a home loan?

There’s no specific score which will qualify you, if you follow the step to build a healthy credit score and maintain a healthy debt-to-income ratio, lenders will see you as eligible for things like home loans. Most lenders prefer to lend to an individual whose debt is less than 36% of their gross income.

This, along with healthy credit habits that keep your score in the ranges above 650 will put you in a good position to secure a home loan.

If you are declined for a home loan, what should you do and when do you apply again?

It’s important to know that if you apply for any hard forms of credit like a personal loan, credit card or home loan, you will get a hard inquiry against your credit report, too many of these are a red flag to lenders.

If you have had an unsuccessful home loan application, take a step back and start improving your credit health. There’s no fixed time frame for this, it will take as long as you take to form healthier credit habits, pay back debt and wait for that very happy green indicator on your credit report.

Source: Business Tech

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