How to get credit as a foreigner

A reader has been having problems accessing credit in South Africa because as a non-South African citizen he does not have a green ID book.

Despite working as a qualified architect and having a work permit he finds he is discriminated against when it comes to credit, even for hire-purchase. Another reader was declined a mortgage bond for the same reasons, despite living and working in South Africa for 10 years. What exactly is the position for non-citizens?

Maya replies:
It seems the problem comes down to what most people entering the credit market struggle with: building up a credit record.

FNB says it will open accounts for immigrants holding foreign passports providing the visa includes a work permit, or open certain accounts for holders of refugee permits from Home Affairs. However, when considering an application for credit, the bank looks at the customer’s credit record, income and living expenses.

New arrivals in the country do not have credit records, so the banks struggle to make a credit decision. The same is true for a South African or a long-term resident who has never made use of credit or service agreements (such as a cellphone contract). The best way to overcome this hurdle is to open a small credit account at a retailer and build a credit profile. It will take six to 12 months before the credit bureaus consider the rating to be stable. People should not underestimate the value of their credit records — it can take several years to develop a good record and it should always be protected.

Home Loans for foreigners
Foreigners would still need to build up a credit record in South Africa. However, with the surge in interest by foreigners in South African property, especially ahead of the World Cup, Absa Home Loans launched an International Mortgages proposition in January 2008, with the aim of “providing an accessible and knowledgeable service to assist non-resident and temporary residents purchase property in South Africa”.

The extension of credit to non-residents and temporary residents is governed by the South African Reserve Bank’s exchange-control policy, as well as the credit lending policy of the financial institution extending the credit. It is therefore important for the applicant to understand his/her residency status, as this will determine the way in which the loan is extended and evaluated. There are five basic classifications: 1. SA resident 2. Non-resident 3. Temporary resident 4. Refugee 5. Immigrant.

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