The ultimate guide to credit reports
Many people may not know everything there is to know about a credit report, but they do know that a “good” credit report can help them tremendously when they apply for credit, especially for a vehicle or a house. So, we decided to create the ultimate guide to credit reports to answer all the other questions that people have about credit reports.
Here are some of the questions sent through by readers (with regard to credit reports).
Q: What exactly is a credit report?
A: A credit report is a collection of information (on an individual) supplied by credit providers to credit bureaus, approximately every 30 days. A credit report will show your:
- defaults (accounts that are more than 3 months in arrears)
- applications for credit
- credit score
Q: Why is a credit report important?
A: Credit providers will use your credit report (along with other information) to determine whether you qualify for more credit.
Q: What is a credit score?
A: A credit score is a number that evaluates your creditworthiness and is based on your credit history, as displayed on your credit report. The higher the score, the more financially trustworthy a person is considered to be.
A 3-digit number tells you what your credit report says about how you manage your credit, and (along with other criteria) whether you should be granted more.
Q: What exactly does your credit score number mean?
Generally, the higher your score, the better!
Scores range from 0 to 999 or from poor to excellent.
- EXCELLENT: 767 – 999
- GOOD: 681 – 766
- FAVOURABLE: 614 – 680
- AVERAGE: 583 – 613
- BELOW AVERAGE: 527 – 582
- UNFAVOURABLE: 487 – 526
- and POOR: 0 – 486
It is always in your best interest to maintain a good credit score.
The following impacts your credit score
- Too much debt
- Your account balances are too high
- Late payments
- Too many new accounts
Sebastien Alexanderson, CEO of National Debt Advisors says that many people only check their credit score when it is too late, especially only after a home loan, vehicle finance, loans or request for credit has been turned down.
“ SA consumers are being reactive as opposed to pro-active. Just like it is important for us to be on top of our physical health (specially now during Covid 19)– so we should strive to be fully informed of our financial health as well”
Q: Where can you get a credit report and how much does it cost?
A: You are entitled to one yearly FREE credit report from every credit bureau!
According to Transunion, one of South Africa’s leading credit bureaus – fewer than 5% of South African consumers make use of the legislation which entitles them to obtain their credit report free of charge from every credit bureau, every year.
All credit bureaus are mandated by the National Credit Regulator (NCR) to supply consumers with a yearly credit report, so that they may be aware of their credit score and standing at all times.
You may access your free credit score from any of the following credit bureaus:
Q: What do you do if the information showing on your credit report is incorrect?
A: Irrespective of which credit bureau’s report you find the discrepancy on – you may log a dispute and request an investigation. This normally takes about 21 working days to complete.
If the dispute is within the ambit of the credit bureau, they will do the investigation free of charge.
Q: What is a “credit fix scam” people are always referring to?
A:People are desperate to access credit, and will go to great lengths to clear their credit records so that they may get it.
Fraudsters capiltalise on that desperation. They will promise to “clear” someones credit profile, and promise to “remove their names from the blacklist”
Popular scam alerts from “credit report fixers” include:
- Get judgements removed from your credit record
- Rehabilitate your credit profile
- Remove your name from the blacklist.
All of the above are normally offered at a fee. These are scams and these are illegal.
No unauthorised company, attorney, debt counsellor or individual can simply remove negative data from the various credit bureaus – regardless of how much you pay them.
Q: Will the payment holiday granted to me by my bank during lockdown, negatively affect my credit report?
A: It isn’t supposed to. Banks were supposed to inform the credit bureaus when you accepted the terms and agreement of the payment holiday. As we know, with the banks being closed, the NCR being closed and many organisations having technical and staff issues at the start of the lockdown – there is every possibility that some things might have fallen through the cracks.
If you took a payment holiday, I would suggest that you access your free credit report (from every credit bureau) that you entitled to every year, so that you can ensure that all is in order.
Q: What do the terms on my credit report mean?
What is a judgment?
- A judgment is a court order granted against a consumer who has not paid their debts to a credit/service provider.
- A judgment will remain on your credit report for 5 years, until the judgment is rescinded by a court or paid in full (before the 5 years are over)
What is default information?
- Default information is negative information supplied to the credit bureaus by your credit provider if you fail to pay your account, but legal action had not yet been taken.
- “Defaults” usually remain on your credit report for 1 year, or until the debt is paid in full (before the 1 year is over).
Become financially responsible and savvy, by getting a copy of your credit score today.