Credit Score Explained

Credit score: What is it?

Credit scores are important if you ever want to borrow money from a financial institution, whether it's to purchase a big asset like a house, or to buy those sneakers you've been eyeing for months. Read on to find out what exactly a credit score is, how it works, and get a few tips on how to improve yours.

Credit and Loan Basics

Definition

A secured loan requires the borrower to offer an asset, such as a car or property, as collateral. This asset secures the loan until it is fully repaid, at which point the borrower regains full possession.

Legality

Secured loans are completely legal. Lenders take a calculated risk by lending money and may initiate repossession if the loan is not repaid and there's no insurance on the loan.

Advantages

- Lower lender risk, allowing for larger loan amounts.
- Longer repayment periods are often available.
- The lender does not take physical possession of the asset during the repayment period.

Disadvantages

- The borrower risks losing a valuable asset if unable to repay the loan.
- Example: A student using a car as collateral for a study loan risks losing the car if unable to repay.

Practical Note

Using loans wisely can alleviate financial pressure. For those looking to compare personal loan options (unsecured), tools like comparison websites can provide quotes quickly, helping borrowers make informed decisions before committing.

Compare personal loan quotes

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I was looking for insurance quotes andhippo managed to show me the most affordable options available for me. It really helped me to make an informed decision about my car insurance.

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Service provided is useful. Getting multiple quotes quickly and easily in one place is very convenient. When capturing my age I had to scroll for longer than needed to get all the way back to 1978. Consider changing this to an input field where you can just type in the date.

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I saw an ad relating to finding an insurance company to cover my vehicle. I responded and received a call immediately from a company that I showed interest in. The call turned out to be very helpful. The entire experience took less than 20 minutes. I am therefore impressed by what Hippo is doing as an online service.

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Independent Service Rating based on 20 704 service ratings.

Compare more than just Personal Loans

With Hippo we make it easy to find great deals across multiple products.

Debt Consolidation

A Debt Consolidation loan merges multiple debts into a single Personal Loan with one monthly repayment, one credit provider and ideally a lower interest rate.

Debt Counselling

Debt Counselling helps over-indebted consumers restructure what they owe into an affordable repayment plan and negotiating with creditors on your behalf.

Funeral Cover

Covers the immediate costs associated with a funeral. Premiums are influenced by your age, number of policy members and amount of cover.

Personal Loans

Compare rates across multiple lenders to find a fair deal. Rates vary based on your credit profile and chosen loan term, so comparison matters.

Medical Aid

Gives you access to private healthcare. Compare plans, benefits and costs to find the right fit without paying for cover you don't need.

Car Insurance

Covers your vehicle against damage, theft and third-party claims. Premiums vary by driving history, usage, vehicle model and where you park overnight.

Medical Gap Cover

Covers the difference (shortfall) between what your Medical Aid pays and what a specialist charges. Gap Cover is not a substitute for Medical Aid.

Medical Insurance

More flexible and affordable than Medical Aid, Medical Insurance covers day-to-day health needs or specific procedures. This product is not a substitute for Medical Aid.

Business Insurance

Protects your business’ property, assets and third-party liability. The right cover depends on the nature, size and risk profile of your operations.

Life Insurance

Provides financial security for your dependants. Ensure your home loan, rental costs, debt and children’s tuition are taken care of when you pass.

Home Contents Insurance

Covers your home's contents against damage, theft and loss. Compare quotes to find the most competitive rate.

Building Insurance

Covers the physical structure of your property against damage. Compare quotes to make sure you're not overpaying.

Motorbike Insurance

Covers your motorcycle against damage, theft and third-party claims. Premiums vary based on your personal profile.

Pet Insurance

Vet bills can add up quickly, especially when unexpected. Compare quotes to find a policy that fits your fur baby’s needs (and your monthly budget).

Travel Insurance

Protects you against unexpected medical and/or flight-related costs when travelling locally or abroad. Premiums vary based on the type of cover you opt for.

Home Fibre

Fibre prices and speeds vary significantly by area and provider. Find the fastest, most affordable package without contacting each provider separately.

Scratch and dent cover

Covers minor cosmetic damage to your vehicle without affecting your Car Insurance claims record. Compare plans to keep your car looking good without paying out of pocket.

Tyre and Rim cover

Covers the cost of repairing or replacing damaged tyres and rims. Compare plans to find affordable cover that protects you against one of South African motoring's most common expenses.

Motor Warranty

Protects you against unexpected mechanical and electrical repair costs after your manufacturer warranty expires. Compare plans to find the right level of cover for your vehicle.

Service Plans

Covers the cost of scheduled vehicle maintenance, including parts and labour. Compare service plans alongside your Car Insurance for a complete picture of your motoring costs.

Vehicle Tracking

Helps protect your vehicles by assisting with recovery in the event of theft. Many providers also use Vehicle Tracking to flag when your vehicle is in an unfamiliar area.

Hippo Comparative Services (Pty) Ltd is an authorised financial service provider.

FSP number: 16357. Block A, Steyn City Capital Park, Erling Road, Riverglen, Dainfern, 2191

*Based on independent research by Kaufman Levin & Associates 2025.

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