You’ve been for the test drive, you have your heart set on that new car, and you’ve negotiated a price that you can comfortably afford.

You have enough money to put down a deposit, and you earn a sufficient sum to afford the anticipated monthly repayments. You fill in your finance paperwork and expect all will turn out well.

You wait for that call, only to be told that your application has been denied because of your poor credit rating, which you might not have known about in the first place.

And so, you’re left without a new set of wheels, and wondering what you could have done differently to know your credit score in the first place and how to improve it.

“Your credit score shows you any issues you might have in your credit history,” explains Barend Smit, marketing director of MotorHappy, a supplier of motor management solutions and car insurance options. “If you apply for car finance, the financial institution will also have access to this credit score.

“They will have a good view of how well you pay your bills and how much debt you have. It gives credit providers a birds eye view of how you manage existing credit.”

A high credit score is favourable to financial providers, while a low score implies that you have a negative credit rating and either your request for finance will be denied, or your interest rate will be even higher.

Credit providers use different scoring methods but the score range is usually between 330 and 830. Above 750 is an excellent score.

“Of course, when it comes to taking out car financing, credit providers will still also consider the usual risk factors like your expenses and salary,” advises Smit.

How to get your credit score

By law, everyone in South Africa is entitled to one free credit report a year. There are several credit bureaus in South Africa who are obliged to give you your score when you request it the first time. I

f you ask again that year, they can charge you for it. It’s fairly quick and easy to apply for your credit rating.

Here are some of the companies offer credit score checks in South Africa:

* TransUnion

* ClearScore

* Credit Bureau

* Experian

* Compuscan

* My Credit Status

How to improve your credit score:

* Pay your bills on time. Set up debit orders to pay for regular expenses, like your utility bills.

* Only apply for credit when you need it. Every time you apply for credit, a credit check is done, which lowers your score.

* Regularly review your credit report. You can check for fraud and see if there are any mistakes that could be negatively affecting your score.

* Build your score by using your credit card often and spending small amounts and paying them off each month.

* Pay off debt: Compile a monthly budget that includes paying off creditors each month. Start with the things that are costing you the most interest. Ensure you always pay the minimum instalment.

* Go for debt counselling if you’re overwhelmed and not sure where to start cutting your debts, A debt collector can approach creditors on your behalf to make plans to pay off your debts while arranging your living expenses.

When it comes to buying a new car on credit, don’t only think about the monthly repayment costs, advises Smit.

“Remember to factor in additional expenses like petrol and insurance. Deciding to buy your vehicle new or previously loved is a big factor to consider.

“Most new cars come with a new service plan, but they also come with an increased initial cost. A previously loved car would be less expensive at first but might require a bigger maintenance budget.”