4 ways young South Africans can build a strong credit profile

You’ve landed your first job or finally have a steady income. The future feels wide open, but when it comes to credit, you’re cautious. And with good reason. We’ve all seen the headlines about rising youth debt and defaults. But what if the right kind of debt, handled wisely, isn’t a trap at all? What if it’s the very tool that helps you build financial freedom?

 This isn’t about getting people into debt. It’s about giving young earners a responsible, accessible way to build the financial profile they deserve. A first loan, managed well, can open doors to better credit terms and real opportunities in the future.

Changing perspective from ‘borrowing to spend’ to ‘borrowing to build’ can help young people look at debt strategically. Loans are a deliberate way to establish a credit record that unlocks future milestones, from qualifying for a car loan at a lower rate to being approved for your first apartment lease.

The numbers back it up. According to the Standard Bank 2025 Youth Barometer, credit card use only starts to rise meaningfully in the late 20s, with South Africans under 35 making up just 16% of the bank’s credit card base. However, most young people aren’t avoiding credit by choice. A recent study by Eighty20, a consumer analytics company, shows that of the 6.7 million South Africans aged 18–24, only about a million are credit active, leaving millions “credit invisible” to the formal economy.

For many people in their thirties, a deep-seated aversion to credit remains, which, while understandable, is not helpful. By avoiding loans, they inadvertently lock themselves out of their greatest benefits, including lower interest rates on premium financial products if they have built a good credit score.

 How to engage confidently with credit:

Choose your ‘starter loan’ wisely

Your first loan is more than a transaction; it’s the opening chapter of your financial story. Go small and strategic. A low-value, short-term loan from a registered credit provider reduces your risk and helps you build a clean record.

 Borrowing from unregistered or informal lenders might feel easier, but it won’t be recorded by credit bureaus, meaning your good repayment habits won’t count towards your score. Choose a product designed to help you succeed.

Treat it as a test drive for your financial future

Think of this small loan as a rehearsal for the big financial commitments ahead. The habits you form now, budgeting for repayments, sticking to timelines, managing cash flow, are the same skills you’ll need when it’s time for a car or home loan.

 Managing a R3,000 loan responsibly today builds the discipline for managing a R500,000 one tomorrow.

Automate your repayments

The smartest borrowers don’t rely on memory; they rely on systems. Set up a stop order or automatic debit for your loan repayments. This ensures you pay on time, every time, without the stress of remembering due dates.

 A perfect payment history is the most powerful ingredient in a strong credit score.

Remember, responsible borrowing today saves you money tomorrow

Every on-time repayment is a signal to lenders that you can be trusted, and trust is rewarded with possibly lower interest rates and better terms for secured credit.

Today, your small starter loan may come at a standard rate. But tomorrow, your solid repayment record could mean big savings on a car loan or home loan. Responsible borrowing isn’t about the short term; it’s an investment in your cheaper financial future.

You don’t have to stay credit-shy or invisible to the system. Building financial credibility isn’t about taking on reckless debt but about making intentional moves that show you’re dependable.

* Gopichand is the risk director at Atlas Finance.

PERSONAL FINANCE