Trust over Collateral

Long before formal credit scores and loan agreements, borrowing in many South African communities worked on a simple principle: trust.

In informal township lending, your ability to borrow was often tied to your reputation. If you had a “good name” (i.e. someone who paid back, communicated honestly, and respected agreements), access to credit followed naturally.

When Reputation Was the Credit Score

In these settings, lenders didn’t need algorithms or databases. They usually relied on relationships, shared knowledge and social accountability. Missing a repayment didn’t just affect your wallet; it affected how you were seen in the community.

Although this system wasn’t perfect, it was deeply human. It recognised behaviour over time and rewarded consistency rather than formality.

A Familiar Idea in a Digital World

While modern loan apps may seem worlds apart from informal lending, the underlying idea hasn’t disappeared. Many digital lenders now focus less on traditional collateral and more on how borrowers behave over time — whether they repay on schedule, communicate clearly and use credit responsibly.

Instead of a neighbour vouching for you, data does the talking. Patterns replace personal references, but the principle is the same: trust is built, not assumed.

Why This Matters for First-Time Borrowers

For people without long credit histories or formal employment records, this move is significant. It opens the door to borrowers who may have been excluded by rigid systems in the past, while still encouraging responsible borrowing.

Access is no longer just about what you own, but how you manage what you’re given.

The Balance Between Trust and Responsibility

Of course, trust works both ways. Borrowers need clarity on repayment terms, costs and consequences, just as lenders need confidence that loans will be repaid. When expectations are clear on both sides, credit becomes less intimidating and more useful.

Looking Ahead

As digital lending continues to grow, the most effective systems will be those that balance technology with a deep understanding of human behaviour. In many ways, the future of credit is borrowing lessons from the past by recognising that trust, once earned, remains one of the strongest forms of collateral.