Do You Know What Is On Your Credit Bureau Record?Jul 3, 2015 Blog Personal Finance
Millions of South African consumers are blissfully unaware of the content and status of their own credit bureau reports – and to be honest, many still do not even realise that they are listed at the credit bureaus. Some consumers only have a very vague idea of what role the credit bureaus play in our economy, or they assume that they are not affected by such matters, because they have never had any “problems with their creditors or the law”!
“Consumers need to be informed that the moment they enter into any credit or service agreement, their personal details, exposure and monthly payment behaviour is captured, stored, updated and the information is provided to other entities, such as credit providers, cellular service providers or even prospective employers”, warns Credit Ombud, Mr Nicky Lala Mohan.
The statistics released by the National Credit Regulator for the quarter ending March 2015 revealed that only 149 222 consumers requested their own credit reports in the 3 month period. For the entire 2014, only 698 615 of the +- 22.84 million credit active consumers obtained their own credit reports – less than 4%! This leads to the obvious question: do the other 96% of consumers know what is in their credit reports? Unfortunately, this is unlikely!
“When we discuss their complaints with consumers who approach our office for assistance, we often notice the lack of knowledge of the role of credit bureaus and the manner in which they operate”, says the Credit Ombud. “As a result, many consumers are disappointed when they apply for credit because they then realise for the first time how long the information is displayed and used by other entities in assessing their credit applications. Consumers are bitterly disappointed when told that the negative information will still appear on their profiles for up to 5 years even though the accounts are now paid up or in good standing”, he added.
A further worrying number, is the increased number of “impaired accounts”, which increased by 91 000 in the last quarter ending March 2015, as compared to the previous quarter. The number of consumers with impaired accounts also increased from 10.26 million in the previous quarter to 10.41 in this last quarter. This figure represents 45% of all credit active consumers.
The impaired accounts are made up as follows: 22.4% of consumers are three months or more in arrears; 12.2% of consumers have adverse listings, and 10.4% of consumers have judgments and administration orders.
“There are no doubt many diverse reasons for the increase, but if only more consumers understood what it meant to have an account in “impaired status”, it could go some way to see consumers taking active steps to correct their payment behaviour and improve their credit reports”, advised Lala Mohan.
A consumer with any form of impaired account will no doubt find it more difficult to access credit, and some may even be affected when applying for certain types of employment. These consumers are most likely to refer to their own predicament as being “blacklisted”. The Credit Ombud stressed the following: “Our office and the credit bureaus have worked hard the past few years to educate consumers about the fact that there is no such thing as a “blacklist”. All the information in respect of credit accounts and service agreements are shared and stored, and it is not correct to refer to any person as being “blacklisted”. The full spectrum of a consumers’ account information is recorded and it is possible that only one or two negative listings could prevent the consumer from accessing credit.
How to take charge of your credit report and finances:
The Credit Ombud advises consumers that one of the best ways to take charge of their finances is to start with obtaining a report from each of the major credit bureaus. The good news is that every consumer is entitled by law to one free report from each bureau each year.
The next step is to assess whether all the information on those reports are accurate. If not, again the law provides the consumer with the right to dispute the inaccurate information.
Try to pay all the accounts every month, on time, and pay the full instalment. Missed payments will always reflect as such – even if you make a double payment later. The intention should be to prove to any prospective credit provider that you are a reliable and consistent payer. Skipping payments are thus never a good thing!
You can improve your credit record if you pay everything on time as per the agreements. Over time you can always change your report to only reflect positive information.
Paid-up defaults and Judgments will be removed from your credit record. Ensure that this is done by obtaining a report shortly after making the full payments. If it still reflects, lodge a complaint with the relevant bureau. And if you have the means, pay up any amounts owing immediately!
Should you receive a notice to warn you that a credit or service provider intends listing a default against your name on the bureau, take immediate action. This way it is still possible to avoid the default from being listed. Should your report contain a default listing, ensure that you did receive the notification letter mentioned above – failing which you may have grounds to lodge a complaint with the relevant credit bureau.
Consumers can contact the Office of the Credit Ombud for free assistance on matters relating to problems experienced with any unfair or incorrect listings on a credit bureau as well as any matter pertaining to their credit agreements, such as account disputes or issues relating to garnishee orders. The office can be contacted on 0861 66 28 37 or visit their website on www.creditombud.org.za, or send a sms to 44786 and they will phone you back.