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Good debt, bad debt
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Johannesburg - A credit report records your credit history and activities. Retail accounts, personal and home loans and other kinds of debt yield data which South African credit bureaus collect from registered credit providers (like your bank or financial service provider).
When you take out a loan or apply for credit, somewhere in the fine print of your agreement will be a clause letting you know that information relating to the management of your debt will be furnished to the credit bureaus; when you sign the contract, you are agreeing to this.
This data provides a payment history and gives a credit score indicating what kind of risk you are – in other words, are you a reliable payer who always pays all creditors the right amount and on time, are you a bit erratic, sometimes paying a bit late or skipping a month, or are you likely to default on your debts?
This information is collated into a comprehensive report known as your Credit Report.
It can then be supplied to registered credit providers. When you apply for credit, they will use it as part of the information on which they base their decision whether to grant you credit.
This is of benefit to the credit provider, obviously, because it reduces their risk of bad debt; but it is also of benefit to the consumer.
The credit provider uses your data not only to see whether you are a good or bad payer, but also to assess whether you will be in a position to manage and repay your debt – something we’re not always very good at doing for ourselves!
Being refused credit on the basis of your credit report may just keep you from getting into debt too deep and drowning.
There are four major credit bureaus in South Africa:
1. TransUnion (www.transunion.co.za)
2. Experian (www.experian.co.za)
3. CompuScan (www.compuscan.co.za)
4. XDS (www.online.xds.co.za)
Your credit report is not a secret – you are entitled to request one free credit report from each of the credit bureaus every year. If you want more than one, you will pay R22.80 (including VAT) per additional report.
This is useful, as it means you can see in advance what any prospective creditor will see – meaning no unexpected shocks, such as discovering that you’ve been blacklisted. And if you disagree with something on your credit report, you can contact the bureau that issued the report.
You will be asked to complete some forms and furnish the evidence you have that contradicts their record. The bureau should give you a reference number – insist on that, as it’ll be important when you follow up – and will take about three weeks to investigate.
If you’re not satisfied, you can contact the Credit Ombud via www.creditombud.org.za or call 0861 OMBUDS (0861 662837). This is a free service.
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When you take out a loan or apply for credit, somewhere in the fine print of your agreement will be a clause letting you know that information relating to the management of your debt will be furnished to the credit bureaus; when you sign the contract, you are agreeing to this.
This data provides a payment history and gives a credit score indicating what kind of risk you are – in other words, are you a reliable payer who always pays all creditors the right amount and on time, are you a bit erratic, sometimes paying a bit late or skipping a month, or are you likely to default on your debts?
This information is collated into a comprehensive report known as your Credit Report.
It can then be supplied to registered credit providers. When you apply for credit, they will use it as part of the information on which they base their decision whether to grant you credit.
This is of benefit to the credit provider, obviously, because it reduces their risk of bad debt; but it is also of benefit to the consumer.
The credit provider uses your data not only to see whether you are a good or bad payer, but also to assess whether you will be in a position to manage and repay your debt – something we’re not always very good at doing for ourselves!
Being refused credit on the basis of your credit report may just keep you from getting into debt too deep and drowning.
There are four major credit bureaus in South Africa:
1. TransUnion (www.transunion.co.za)
2. Experian (www.experian.co.za)
3. CompuScan (www.compuscan.co.za)
4. XDS (www.online.xds.co.za)
Your credit report is not a secret – you are entitled to request one free credit report from each of the credit bureaus every year. If you want more than one, you will pay R22.80 (including VAT) per additional report.
This is useful, as it means you can see in advance what any prospective creditor will see – meaning no unexpected shocks, such as discovering that you’ve been blacklisted. And if you disagree with something on your credit report, you can contact the bureau that issued the report.
You will be asked to complete some forms and furnish the evidence you have that contradicts their record. The bureau should give you a reference number – insist on that, as it’ll be important when you follow up – and will take about three weeks to investigate.
If you’re not satisfied, you can contact the Credit Ombud via www.creditombud.org.za or call 0861 OMBUDS (0861 662837). This is a free service.
Add your voice on the Debt Issue:
*Ask our experts
*Share a personal story
*Write a guest post
