Many South Africans have never seen their own credit report. When you apply for credit the credit provider will do a quick credit check but not much information is passed on to the consumer. Most of the time the credit provider has a system that does a quick scan of the credit report and spits out an answer. We call this the credit provider ‘black box’.
The black box is frustrating for consumers because when they are refused credit they are not really given any reasons as to why. They may get an sms or email or response from the agent which is not very detailed and is often just one word, for e.g. affordability. This obviously means that the consumer cannot afford the loan, but why, and what is this based on?
What Is Recorded On Your Credit Report?
A real credit check is when a consumer gets a full credit report and can see all the information that the credit bureau has stored. Below is a list of what information is recorded on a credit report:
- Full name
- Id number
- Birth date
- Current and previous addresses
- Current and previous places of employment
- Contact Numbers
- Defaults and judgments
- Legal action/Court Orders
- Debt Counselling
- A list of all accounts
- Dates accounts were open
- Type of account
- Account balances and credit limits
- Payment history for each account
- All credit inquiries made when applying for credit
- Calculated by analyzing all information on the credit report
What Is A Credit Score?
Before granting you a loan credit providers do a quick assessment of your credit report. Your credit score is a good indicator of your overall credit health. Generally, a lower credit score indicates that a consumer has a lot of debt, has missed debt payments or has legal action on some accounts. A higher credit score indicates that a consumer repays all of their debt on time or has little debt outstanding.
However, with this being said, there are certain ways to have a high credit score but actually have serious debt problems. By keeping up to date with all debt repayments by using credit to pay off other credit, you can manipulate your credit score. Consumers use large credit card limits and big overdraft facilities to pay off personal loans and store cards. This is a very dangerous thing to do and often results in financial issues.
Why Is It Important To Check My Credit Report Yearly?
The reason that it important to check your credit report yearly is so that you are aware of your credit standing and to check the accuracy of the details stored by the credit bureaus. The credit bureaus and credit providers can make mistakes and this could have adverse effects on your credit report and credit score. For example, debts that have been settled may still appear on your report.
Another reason to do a yearly credit check is that there tends to be a lot if identity theft/fraud in South Africa. Thieves and hackers can use your identity to take out loans. These appear on your credit record and might go unnoticed for years. It is important for you to check that all of the information is accurate.
Did you know?
You are entitled to one FREE credit report every year.. This is another reason for you to do an annual check. It also leaves you with no excuse not to check you report annually.
Here is a list of the South African credit bureaus:
Debt counsellors can also draw credit reports and give you great debt advice. If you feel that you are struggling with debt, contact a debt counsellor for an assessment.