Not many things in life are completely free of charge, but you’re entitled to a free up-to-date credit report every year and this is your right in terms of the National Credit Act.
Knowing your credit record and keeping it healthy is particularly important when applying for big items such as a home loan, or a vehicle or business financing – because credit providers check your credit and payment behaviour before they approve your loan.
Credit bureaus were created for the Credit Industry and the information is provided by companies that offer credit such as banks, retailers, utility and insurance companies
They also contain info from the public domain, in other words the South African courts, for info on sequestrations, Admin Orders, Judgements, garnishees and debt review.
There is nothing on criminal judgements on the credit bureau.
Important to remember here. The credit bureau is a thing that accepts information and analyses it, and it is only as good as the information supplied, so the credit bureau generally is not the problem, it is the credit provider or doctor or lawyer who supplies the wrong info, or doesn’t supply any info at all.
It’s like the famous saying about computers. Garbage in garbage out, so don’t blame the computer if it is given the wrong info.
The three main parts of a credit report are :
Something interesting that appears on the credit report and which causes a lot of excitement is under Default Information, sometimes here you will find
And I have had it many times where a client comes flying into my office and says, stop paying my credit card the bank has written off the amount look here it says so on my credit report
No, unfortunately not, this normally just means that the account has been moved to the collections space, and removed from the accounting area where the regular accounts sit.
It’s an unfortunate choice of words, but if your credit report says written off, then you still owe the money, and now someone is going to start phoning you a few times a day to collect the money.
The NCA entitles you to one free credit record check a year, with each bureau. Here are the contact details of four major credit bureaus:
If you disagree with a listing you can lodge a dispute with the credit bureau. They’re going to require you to provide proof, for instance, a receipt for the amount paid, or a paid-up letter from the bank, or a statement on the account showing a different balance to what they have.
Sometimes it’s just a mistake that needs to be fixed, and sometimes if there is still an outstanding amount then you will have to finish paying the account before they will remove it. Often people will say that a judgment is paid up and we contact the lawyers who got the judgment and they say, no there is still R2000 or whatever left on the account. At that stage, you can dispute it with the lawyer, and ask for statements of account and check them if you think that they are wrong, or you pay the amount and tell them to remove it from the credit bureau.
If, after 20 days, the adverse listing remains, you may approach the Credit Ombud for help. The credit ombud will get all the information and determine if you or the party you are arguing with is correct and make an order which has to be followed.
Call 0861 662 837, e-mail Ombud@creditombud.org.za or sending an SMS to 44786 and they will call you back.
Here is some interesting information - Less than 5% of South Africans regularly check their credit records...
And here is some more good news - 70% of those who lodge a complaint with the credit bureaus about an unjustified listing have them removed.
The first thing that you do is ask them why
Because credit providers such as banks, cell phone companies and retail outlets have the right to reject a credit application, they have to offer reasons as to why.
They are legally obliged to tell you the reasons if you ask. In most cases, they won't tell you if you don't ask.
Our credit information, along with employment history, income, affordability assessments and the type of credit we apply for, is summarised on our credit profiles.
Each credit bureau calculates a credit score - a three-digit number - for every credit-active consumer, using a complex formula that evaluates how you pay your bills, how much debt you carry and how all of that compares to other credit-active consumers.
In effect, it reveals – in a single number – what your credit report says about the management of your existing credit.
What you do have to realize is that all credit bureaus use their own method of calculating a credit score, so you can’t compare a credit score from Compuscan with a credit report from Experian.
Unfortunately, you won’t have a credit score if you don’t have any debt because your credit score is calculated and based on your credit habits. This doesn’t mean your financial health is bad, there’s just simply not enough data to give you a credit score.
This can be bad news if you’re looking for a home loan though, so your first steps will be to apply for financial products where you can start building a credit record.
These can include:
This is a little bit crazy, you don’t need debt, and you manage your life without it, but before you can buy a house you need to open a credit card and a clothing account and run it for quite a while.
This has been recognized and there is a move at the moment to change this, with so much information out there, and computers which are powerful enough to search and analyse tons of info, they use things like cell phone accounts, cash purchases , loyalty programs, utility accounts and a lot of other info which doesn’t appears on a credit report and analyse that info, see how you have paid and what the type of thing is that you spend money on to determine if you are a risk or not for a home loan. Unfortunately, this is not generally available right now, but with the speed of technology at present I would expect to see it in the next few years.
Accessing your own credit report doesn’t harm your score. But a lot of enquiries from Credit Providers when you apply for credit will hurt your score.
The credit bureaus separate what they call hard and soft enquiries, soft enquiries are when you draw for information purposes or someone you are going to work for draws your credit report.
Hard enquiries are when the report is drawn to apply for credit, so drawing your own report will not harm your credit score.
So if you are thinking of buying a major item like a house or car soon, then check your credit record. If its fine wonderful, if it’s not then either the info there is wrong and you can dispute it, or you need to do something to fix it.
If you need help with the process, or you need help with your debt or have any questions about debt, contact RD Debt Counselling on 011 421 2918.
