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.
“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.
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.
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.