Cape Town - Many consumers could be struggling to obtain credit due to their ignorance of certain aspects of the National Credit Act, according to Megan Gedye of Garlicke & Bousfield.
The act stipulates, under section 70, that "consumer credit information" includes a credit history.
A credit history can include a consumer's applications for credit, credit agreements, defaults, judgments or the threat of judgment, financial history, including past and current income, assets and debts, education, employment, career, professional or business history and personal information like address and marital status.
"All the initial information you have given your credit provider will be listed with the credit bureau, together with any subsequent information regarding your conduct under the agreement with that credit provider," said Gedye.
"Credit providers such as banks - on whom probably 90% of the population are dependent for credit - have access to this information."
Consequently, ignorance of section 70 has seen many individuals unwittingly listed with the credit bureaus and potentially struggling to obtain credit when they have defaulted on a credit agreement.
"Although the act does allow for the removal of a judgment listing from the bureaus, the judgment must have been paid in full or at least to the credit provider’s satisfaction only if the judgment has in fact been rescinded by a court of law," said Gedye.
"A rescission application can be both costly and time consuming."
Silver lining
The new credit regulations, however, brings a silver lining for people struggling to obtain credit.
The regulations envisage a two stage process. The first stage relates to a "once off removal" and the other an "ongoing removal of information".
The first stage refers to the removal of negative classifications, such as "default", "delinquent" or "slow paying" and adverse listings such as "written off" or "handed over".
The second requirement applies where all paid up judgments and adverse information listings will be removed on an on-going basis.
Both stages are automatic and no application by the individual is necessary.
"While access to credit in this country is encouraged and the new regulations are welcome, credit providers must now ensure they are particularly vigilant when extending credit," concluded Gedye.
* This information should not be regarded as legal advice and is merely provided for information purposes on various aspects of litigation.
- Fin24
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The act stipulates, under section 70, that "consumer credit information" includes a credit history.
A credit history can include a consumer's applications for credit, credit agreements, defaults, judgments or the threat of judgment, financial history, including past and current income, assets and debts, education, employment, career, professional or business history and personal information like address and marital status.
"All the initial information you have given your credit provider will be listed with the credit bureau, together with any subsequent information regarding your conduct under the agreement with that credit provider," said Gedye.
"Credit providers such as banks - on whom probably 90% of the population are dependent for credit - have access to this information."
Consequently, ignorance of section 70 has seen many individuals unwittingly listed with the credit bureaus and potentially struggling to obtain credit when they have defaulted on a credit agreement.
"Although the act does allow for the removal of a judgment listing from the bureaus, the judgment must have been paid in full or at least to the credit provider’s satisfaction only if the judgment has in fact been rescinded by a court of law," said Gedye.
"A rescission application can be both costly and time consuming."
Silver lining
The new credit regulations, however, brings a silver lining for people struggling to obtain credit.
The regulations envisage a two stage process. The first stage relates to a "once off removal" and the other an "ongoing removal of information".
The first stage refers to the removal of negative classifications, such as "default", "delinquent" or "slow paying" and adverse listings such as "written off" or "handed over".
The second requirement applies where all paid up judgments and adverse information listings will be removed on an on-going basis.
Both stages are automatic and no application by the individual is necessary.
"While access to credit in this country is encouraged and the new regulations are welcome, credit providers must now ensure they are particularly vigilant when extending credit," concluded Gedye.
* This information should not be regarded as legal advice and is merely provided for information purposes on various aspects of litigation.
- Fin24
Help us help you by taking our second annual Debt survey and you could win R3 000, or add your voice by sharing your debt experiences, debt-busting tips and insights. Have a question? Ask our experts.