/ 2 December 2010

Consumer credit performance improves

Good news from the credit bureaux — South Africans’ credit standing appears to be improving. Of the 18,35-million consumers using credit, 53,7% (or 9,86-million) have been classified as in good standing — an improvement from the last quarter. However, it is still of grave concern that nearly half of all credit-active consumers are indebted — which means they are three months or more in arrears.

This is the first improvement in consumers’ credit reports since December 2007, which is good news — but can we keep it up? The number of consumers with impaired records decreased to 8,49-million this quarter. This indicates an improvement in the credit records of 97 000 consumers from last quarter.

In terms of accounts, the number of impaired accounts decreased by 505 000 to 16,55-million. This is an improvement of 0,4% over the last quarter.

This suggests that we’re using the drop in interest rates to service our debts and, according to Gabriel Davel, CEO of the National Credit Regulator (NCR), this could be “indicative of an important shift”. But only time will tell if this will be a sustained improvement. We really do need to use the breathing space we’ve been given to make sure we’re doing everything possible to get out of debt.

Davel went on to report that 189,84-million inquiries were made on consumer credit records — an increase of 40,3% from last the quarter and 29,8% from last year. Of these, 10,65-million inquiries were initiated by consumers themselves — an increase of 17,7% since last year — perhaps showing that consumers are being more proactive in terms of looking after their credit profiles.

Consumer are entitled to one free credit record check a year.

There were 22 569 disputes lodged regarding information held on consumer credit records — a whopping increase of 117,1% since last year. Again, consumers are showing their teeth when it comes to protecting their credit profiles, which can only be a good thing.

The number of credit reports issued to consumers increased to 74 812. Of the total credit reports issued, 82,3% (61 592) were issued without charge, and the remaining 17,6% (13 220) were issued with charge.

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