Loans have become a necessity for people all around the world. This is especially true for residents of rising cities such as Johannesburg, South Africa. Individuals and groups are taking loans every single day to launch their own business or maintain it. However, with the economy in the state it is in after the breakdown a decade earlier, banks and other loaners are more hesitant about who to give the loans to. Hence the people who get loans normally have to meet a specific criteria in order to get it. This criteria assesses whether they have good credit or not.

What Is Credit

Credit is an assessment on how good a person is with loans. It essentially a term to check whether a person pays off their loans completely and in time, or not. Having a good credit history means you are responsible with your loans and pay them off at the correct times. Conversely having bad credit history means having a bad history with loans in general. You might have defaulted at some point, or were regularly late with payments. Such instances give you a bad repertoire when it comes to finances, and you are stamped with a label that says “bad credit.”

Why Is Credit Important

Credit is important since it’s a guide for other people to check how financially responsible you are. Having a good financial history means allowing people to trust you with their money, the basic aspect of a loan. However, a bad credit history shows that the person looking for the loan is not all that trustworthy with money and hence should be avoided. People with bad credit are normally rejected by banks and other major loaning corporations since they are supposed to be untrustworthy and irresponsible with loans. Hence, your credit history can end up costing you huge.

Bad Credit Loans in Johannesburg

With such negativity surrounding bad credit, a number of firms still offer bad credit loans for the residents of Johannesburg. These loans are often small in amount and have to be claimed by offering something major as your stake. But the positive aspects happen to outweigh the negative. With a loan you can not only take care of what you wanted, starting a business or anything else, but by paying it on time you can improve your credit history as well. By doing so, you improve your chances of procuring a loan later on.

However, you need to be careful about who you take the loan from. Some firms offering these kinds of loans tend to scam people or put items worth a lot on stake against the loan. Thus, finding out the reputation of the company or firm you are going to take the loan from is important. Checking interest rates and how they work is also important. Once you know all that, you can proceed to take a loan for a brighter future.

Bad credit Loans for people in Johannesburg

Johannesburg’s wide inequality gap, high unemployment rates, matched with this country’s stagnant economic growth have pushed more Joburgers below the poverty line. According to a report released by StatsSA, Joburgers became a lot poorer between 2011 and 2015, a trend that is expected to continue. Many Joburgers struggle to make ends meet and thus, as a resort, turn to credit to finance their day-to-day needs, almost inevitably leading to the misuse of credit. This is evidenced by the household debt-to-disposable income ratio of 72.6% in the second quarter of 2017 – a significant jump from 54.1% in 2000. According to Vera Noortheiden, executive head of, while credit can be an empowering tool, financial literacy plays a big role in understanding how it makes one’s life easier. “The impact that a lack of financial literacy contributes to the shocking debt numbers can’t be ignored.” “Credit isn’t necessarily bad – but how one uses it could determine how well or poorly it will serve you,” Noortheiden says. She explains that consumers should empower themselves with the knowledge that can help them to differentiate between good debt and bad debt. There are different forms of bad debt.

The most basic form is money borrowed that can’t be repaid. Bad debt is also regarded as debt that’s used to purchase things that bring little or no long-term value. It’s also usually high in interest, like credit card rates. Items bought using bad debt will usually be consumed or lose value long before the debt is paid back. For instance, buying food that you’ll eat this month but paying for it over six months would be considered a bad way to use credit. Noortheiden says that some people can find themselves so deep in the debt trap that keeping up with monthly obligations becomes overwhelming. “The first thing you should consider doing is to speak to your creditors and make a suitable payment arrangement.” For some, this may not be a viable option and turning to consolidation loans may ease the pressure. This could provide respite in the short term but can end up being more expensive in the long-term. “The other danger with consolidating debt is that you might be tempted to open new accounts, or start using again paid up accounts – which would begin yet another cycle of indebtedness,” cautions Noortheiden. Those who can’t seem to take control of their finances can opt for support from debt counsellors, also known as debt reviewers.


Noortheiden explains that the debt review process is a formal legal process and you’ll need to have your financial circumstance assessed by a debt counsellor. “The National Credit Regulator has a list of registered debt counselors and we also offer access to a debt counselling service on our website. Should you qualify, your debt counsellor will put together a suitable debt repayment plan, including all the necessary fees applicable to the process.” What many people who go under debt review are not aware of is that this process could also affect their insurance premiums, Noortheiden points out. “Your insurance premium is calculated based on your risk profile as well as your adherence to financial commitments. A change in your financial situation alters your risk profile.” Some insurance companies do not pay out if you fail to notify them that you’re undergoing debt counseling, which makes it essential for consumers to alert them as soon as they start this process..