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Author Topic: How can i build credit in SA with foreign income? Ideas??  (Read 26806 times)

Whichofsuch

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How can i build credit in SA with foreign income? Ideas??
« on: December 07, 2016, 12:35:15 pm »
Hi all,

I guess i am super fortunate to have dual citizenship and thus earn Income in Canada, coming back to South Africa it is incredibly difficult to purchase anything big on higher purchase without a credit history.

Now i realize i could get an Edgars card and spend on there, but im not sure whether that is the fastest route. The aim is to take on a cell phone contract and in a year purchase a vehicle

Banks seem to have no interest in me having income overseas and as far as they are concerned i cannot get a credit card without income, even if it was just R200.

One idea i had was to contribute to a family trust that would then pay me a monthly salary, after 3 months i could apply etc etc.

Are there any other ideas out there, other than the obvious one of paying cash for everything?
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MoneyChief

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Re: How can i build credit in SA with foreign income? Ideas??
« Reply #1 on: December 07, 2016, 02:22:03 pm »
Do you have a South African residential address? If not you will not be able to FICA.

In my view debt is dumb and should not be messed with. When you say you want to "build your credit", what I hear is you want to "build your lung cancer" or "build your cocaine habit". Stay away from debt, seriously, it is financial cancer.

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gcr

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Re: How can i build credit in SA with foreign income? Ideas??
« Reply #2 on: December 07, 2016, 07:19:21 pm »
MC - I think that is a matter of opinion and what your current debt is. I would never use my capital to buy a big ticket item (house or car) use the banks money, but manage you repayments/interest rate/ additional deposits. My view is that once you erode your capital to pay for these items you seldom have the discipline to build the capital back up again
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MoneyChief

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Re: How can i build credit in SA with foreign income? Ideas??
« Reply #3 on: December 07, 2016, 08:53:55 pm »
Quote from: gcr on December 07, 2016, 07:19:21 pm
MC - I think that is a matter of opinion and what your current debt is. I would never use my capital to buy a big ticket item (house or car) use the banks money, but manage you repayments/interest rate/ additional deposits. My view is that once you erode your capital to pay for these items you seldom have the discipline to build the capital back up again

The idea that debt is good is unfortunately a myth that is very prevalent in our society planted in our brains by clever marketing people who want to sell us stuff even if we don't have the money to buy it right now...

There are in fact several benefits to NOT having debt:

1. If you don't have a massive car payment and a massive house payment it is very EASY to build up capital.
2. Debt is the PRODUCT that banks sell and I don't like supporting banks.
3. Less stress, because you don't need to make those massive payments every bloody month.
4. You can retire earlier if you don't have a house and/or car payments. Invested capital gives 4% (trinity studies), but house (-10%) and car loans (-13%).
5. You need a smaller emergency fund, so less money needed in cash where it is not earning much.
6. You will tend to spend less if you buy cash. Spending cash hurts. This is why most beemers are bought with loans...
7. If you buy cash you can negotiate a better price than with a loan.
8. Less homework. Car loan statements and doing the payments is not fun.
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gcr

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Re: How can i build credit in SA with foreign income? Ideas??
« Reply #4 on: December 08, 2016, 12:09:56 am »
Quote from: MoneyChief on December 07, 2016, 08:53:55 pm
Quote from: gcr on December 07, 2016, 07:19:21 pm
MC - I think that is a matter of opinion and what your current debt is. I would never use my capital to buy a big ticket item (house or car) use the banks money, but manage you repayments/interest rate/ additional deposits. My view is that once you erode your capital to pay for these items you seldom have the discipline to build the capital back up again

The idea that debt is good is unfortunately a myth that is very prevalent in our society planted in our brains by clever marketing people who want to sell us stuff even if we don't have the money to buy it right now...

There are in fact several benefits to NOT having debt:

1. If you don't have a massive car payment and a massive house payment it is very EASY to build up capital.
2. Debt is the PRODUCT that banks sell and I don't like supporting banks.
3. Less stress, because you don't need to make those massive payments every bloody month.
4. You can retire earlier if you don't have a house and/or car payments. Invested capital gives 4% (trinity studies), but house (-10%) and car loans (-13%).
5. You need a smaller emergency fund, so less money needed in cash where it is not earning much.
6. You will tend to spend less if you buy cash. Spending cash hurts. This is why most beemers are bought with loans...
7. If you buy cash you can negotiate a better price than with a loan.
8. Less homework. Car loan statements and doing the payments is not fun.

MC - all your points are brutally practical and have merit, but, there are a few real live experiences that a young person faces when fleeing the nest of the parents. They get themselves a job with the aim of accumulating capital to buy the 1st house/car - they have to have a roof over their head so the choices are remain at home and pay rent or get a place and pay rent. These rent payments have a tendency to decrease the capital saved. I suppose if you live like a Trappist monk you may be able to save your fun capital. Salaries are pretty poor when you start work only really incrementing when you gain experience, knowledge and improve your educational levels. I wonder how long it would take a new employee to accumulate sufficient funds to meet the cash requirements of a flat or second hand car as a starter pack in life, You seem to have an aversion to banks and their policies on lending but having been in banking for 40 years there are two sides to an equation - the people over borrow have themselves to blame as they are not exercising any for of money management or prudence.
Anyway don't want to hijack this thread too much, lets just leave it that we have differing opinion on debt and the use/non use of it as a financial management process 
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Whichofsuch

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Re: How can i build credit in SA with foreign income? Ideas??
« Reply #5 on: December 08, 2016, 08:06:14 am »
Quote from: MoneyChief on December 07, 2016, 02:22:03 pm
Do you have a South African residential address? If not you will not be able to FICA.

Yes i do indeed have residential status.



Yes, i agree that building capital is is far more attractive to lending and i am headed that way.
Coming from ovreseas where interest rates are minimal my understanding of debt may be a little different. Almost to the point point where it is an asset (2.4% interest pa is free money). I have set aside a good amount of capital that is bringing cashflow enough to pay for items on credit.
Thus i cant see too many downsides in using that flow to fund much needed independence etc.
Also when buying something on credit that deposit would be as big as i could afford, understanding the effects of compounding especially in the first two years.
Banks, i agree are master manipulators and the products they offer are there to make them money- society is structured around it, after all it is how money is made and funds an economy. Interest is a hungry dog but it is sometimes necessary in gaining assets.
There are levels to which debt is manageable and having studied finance i should hope to know how to calculate that limit.
Maybe my view of debt being an investment is a little off but i am still learning and the hard way so far has been a good teacher.
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Whichofsuch

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Re: How can i build credit in SA with foreign income? Ideas??
« Reply #6 on: December 08, 2016, 08:18:06 am »
....Unfortunately being young and the older generations refuse to sell anything without a profit it drives prices up so much that we cannot afford things without debt. Nevermind starting off with a job that pays so little peanuts become expensive..
A good way that first worlds are dealing with this is to provide mentorship/apprentices. Education and experience is invaluable - the faster it is learned the better.
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MoneyChief

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Re: How can i build credit in SA with foreign income? Ideas??
« Reply #7 on: December 08, 2016, 10:14:59 am »
Is your problem that you have bad/insufficient credit or is it that you don't have South African income?

To fix your credit rating:
1. Make sure you have available credit, but don't use it all. Max 10%. So if you can borrow R50000 on your credit card, don't use more than R5000 of it.
2. Don't miss payments.
3. Get different types of credit. Credit card, personal loan, car loan, etc.

Check your credit report at one of the credit agencies so you can see what the problem is. They will also FICA you as far as I know. They might send your pin number to your residential address which might be a problem if you are overseas.

Good luck.
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MoneyChief

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Re: How can i build credit in SA with foreign income? Ideas??
« Reply #8 on: December 08, 2016, 02:01:28 pm »
Quote from: Whichofsuch on December 08, 2016, 08:06:14 am
Quote from: MoneyChief on December 07, 2016, 02:22:03 pm
Do you have a South African residential address? If not you will not be able to FICA.
Interest is a hungry dog but it is sometimes necessary in gaining assets.

You might be gaining an asset, but you are also gaining a negative asset (the loan) that cancels out any gains the asset would have brought. There are no shortcuts.
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Whichofsuch

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Re: How can i build credit in SA with foreign income? Ideas??
« Reply #9 on: December 09, 2016, 08:39:14 am »
Yes, i have a residential address as well.

Gaining a negative asset yes, but i would not buy it unless it could at least pay more than half for itself.

Do you know which is the best site to check the credit rating? @MoneyChief.. Most of them require credit card details and we all know that can turn out.

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MoneyChief

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Re: How can i build credit in SA with foreign income? Ideas??
« Reply #10 on: December 09, 2016, 09:55:25 am »
Quote from: Whichofsuch on December 09, 2016, 08:39:14 am
Do you know which is the best site to check the credit rating? @MoneyChief.. Most of them require credit card details and we all know that can turn out.

They are all pretty similar. I've used Transunion and Experian in the past. Probably ok just to use the cheapest one.
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