From September 1 everyone will be able to access their credit records free of charge once a year as part of legislation introduced under the National Credit Act, which came into force at the beginning of June this year.
According to Michael Bouchier, managing director of Credit Health, which assists people in managing their credit, it is vitally important for everyone to regularly check their credit record, which is housed with the various credit bureaus.
Your credit record is exactly that, it shows your entire credit history. It includes what loans you have applied for and what accounts you have opened as well as any negative listings where you may have fallen behind on payments or have a judgement against you.
According to Bouchier, of the four million or so people that are negatively listed, the majority don’t even know about their negative record. ”Your credit record is your biggest asset and needs to be managed properly,” said Bouchier who added that, despite this, in many cases the first time a person is aware of a negative listing is when they are declined credit.
This can happen for a variety of reasons. Firstly, identity fraud is on the increase and is believed to be the biggest threat facing the financial industry. If someone is wandering around using your personal details to access credit, your credit record would be the first place to reflect it.
Another reason as to why people are often not aware of their negative listing is due to the chaos of moving house. They may have an unpaid bill they forgot about and the company does not have the new address, so all letters of demand go to the old address until eventually a judgement is issued against them.
Bouchier said, of the 65 000 judgments issued each month, more than 60% of the people are not aware of them.
When you request a credit report, your new details are automatically updated on the credit bureau’s system. Although this information is not available to credit providers, under the new provision the credit bureau has to notify you of a pending negative listing and provide a month for you to respond. The credit bureau will have your latest contact details, which will help avoid unnecessary judgments.
If a consumer wishes to view their credit record more regularly, the credit bureau may only charge up to a maximum of R20 per credit-record request.
There are currently two credit bureaus, namely TransUnion ITC and Experian. However, all bureaus will have to register with the National Credit Regulator by September 1 and meet with their specific requirements and changes to the way credit history is recorded. From June next year, a National Credit Register will be in effect.
Every single credit agreement signed with any credit provider will have to be reflected on this register. This is part of the government’s attempt to cut down on reckless lending, said Bouchier. Firstly the register will reflect all credit available to the consumer.
Even if the consumer does not make full use of the credit provided, such as an access bond or a store card, it will be assumed that as they have access to it they can use it. This will play an important part in credit extension.
Before a credit provider can offer a customer credit, they will have to calculate the full credit already available to the customer and whether they are able to service that debt. If not, they will not be able to extend credit.
Bouchier said that apart from healthy debt management, it is now even more important to close down credit facilities that you do not use because they could affect you adversely in the case of a credit application. In line with this legislation, credit providers may no longer increase credit limits without prior permission from the customer.