Understanding credit and how to make it work for you

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Many people look at me with so much judgment when I tell them that I don’t have a car. They always ask why I don’t have one and if I don’t think I’m spending too much money on e-hailing services.

My answer is always no.

Do I want a car? Yes, and I don’t just want a car. I want a big car.

Once you drive a big car, you can never go back to a hatchback − been there, done that and there is a reason I went big. The main reason I can’t buy that car is the cost of living that is showing us flames.

Petrol went up again at midnight. Motorists are feeling the pinch as they are now paying over R26 per litre of petrol and more than R29 for diesel.

Now, say you spend R3,500 on fuel every month. You still have to make a R5,300 repayment to the bank for the car. And then there’s insurance - say you’re paying R1,100. Your total comes to R9,900. Nothing wrong with it if you have that kind of money.

But in this economy, how many of you are able to keep the cars you have? My daily transport budget to get to and from work is R200. I don’t remember the last time I used the full amount to pay for transport.

Those who use e-hailing services know that we get rewards every now and then. Just two weeks ago, I was getting up to 50% off on my rides. The joy of paying R49 for some rides over about 14km. This meant more money going into my emergency savings account.

Data is showing that many people are taking loans just to put food on the table.

DebtBusters’ Q2 2026 Debt Index, released recently, highlights that many of those earning R50,000 and above need 103% of their salaries to service their debt.

There’s a prevalence of personal loans and one-month loan accounts which DebtBusters executive head Benay Sager said “indicates the severe cash-flow pressure consumers are under”.

So, if we’re constantly looking for credit, how can we use it intentionally and make it work for us in the end? The reality is: we need credit to get credit. A bank needs to see one’s credit record before they can approve a home loan or any other form of credit being sought.

A recent survey by short-term credit provider Wonga shows that reliance on mashonisas has more than doubled compared to 2025.

Payday to Payday with Sibongile Mashaba (Arena Holdings)

“South Africa’s cost-of-living crisis deepens, with rising reliance on credit driving nearly a third of South Africans to borrow from informal lenders, often for household essentials. [The survey] findings show a financially stretched population highly dependent on credit to get through the month, with 41% of respondents using credit every month for essentials like groceries, transport, and electricity.

“Alongside this, around a third of respondents (32%) have borrowed from informal lenders – or Mashonisas – in the last 12 months,” says Wonga spokesperson Tina Manyanya.

“We wanted to find out how South Africans are spending their money and utilising credit, and the findings are grim; most South Africans are unable to have their basic needs met without relying on credit. This creates a dangerous cycle of debt reliance and over-indebtedness, which fosters an environment where people are not empowered to save or plan.

Rise in reliance on informal lenders

Manyanya says in 2026, the number of people borrowing from informal lenders is more than double the 15% recorded by Wonga in 2025.

“Informal borrowing has been mostly concentrated in lower-income bands due to regulatory exclusion from formal credit products: when applying for formal credit, 68% of respondents had been declined at some point, with more than half (54%) attributing it to a low credit score.

“Of those that borrowed from a Mashionisa, 85% surveyed stated that this was because their credit score was too low. Being denied access to credit does not stop people needing it. Being credit dependent but not being able to access it through regulated channels, instead drives people into the arms of informal lenders. The danger is that they are then trapped in a dangerous cycle of increasing debt,” says Manyanya.

How to build your credit score

Mariné van Brakel, deputy CEO at RCS, says your credit score “tells a lender how well you have managed debt before”.

“Banks and lenders use it to decide if you qualify for loans, credit or account cards, vehicle finance or home loans and what interest rate you will pay. Most people only think about their credit score when they are applying for credit or a loan,” says Van Brakel.

“Checking it regularly does two other things for you. It shows you exactly where your credit rating stands and it shows accounts you do not recognise, which is often the first sign of fraud. If something on your report is wrong, you can dispute it with the credit bureau free of charge.”

Three habits that lift a credit score

• Pay on time, every time. Payment history counts for more than anything else.

• Pay more than the minimum when you can.

• Apply for credit only when you need it. Several applications close together count against you.