AFTER DEBT RE­VIEW

CityPress - - Business & Tenders -

Is it pos­si­ble to im­prove your credit record after debt re­view with­out tak­ing on new debt?

HANNALIE CROUS, HEAD OF RE­TAIL CREDIT AT FNB, REPLIES:

It is im­por­tant to note that a bank will con­sider the fact that you were un­der debt re­view as a pos­i­tive rather than a neg­a­tive move be­cause you took ac­tion when you re­alised you were not man­ag­ing your debts.

The best op­tion would be to avoid tak­ing on any more debt after be­ing cleared. Credit providers will view this in a pos­i­tive light be­cause it re­flects that you are fully re­ha­bil­i­tated and are able to man­age your fi­nan­cial af­fairs in a re­spon­si­ble man­ner.

The credit bureau’s records re­flect pay­ment be­hav­iour on credit-re­lated agree­ments, which in­clude cell­phone ser­vices, in­sur­ance and DStv sub­scrip­tions.

So, hav­ing a prod­uct such as a cell­phone con­tract or in­sur­ance pol­icy, and pay­ing the monthly amounts owed on time and in full, will en­able you to build up a pos­i­tive pay­ment pro­file at the credit bureau with­out tak­ing on debt.

Pay­ment pro­files es­tab­lished through the phone con­tract and in­sur­ance agree­ments should en­able you to re-es­tab­lish a pos­i­tive pro­file. It is al­ways bet­ter to save if you want to buy more ex­pen­sive, durable items. Credit should ide­ally only be used to ac­quire as­sets such as a home.

If you de­cide to take on a credit card or store card to build up a favourable credit record, you could con­sider a small credit limit on the card and en­sure the full out­stand­ing amount is paid up in full each month, thus leav­ing no debit bal­ance.

This will in ef­fect es­tab­lish a pay­ment pat­tern that credit providers can take into ac­count with­out the con­sumer in­cur­ring out­stand­ing debt.

How­ever, it is im­por­tant that you man­age this ar­range­ment care­fully and stick to the prin­ci­ple of not tak­ing on more credit and, there­fore, do not fall back into a sit­u­a­tion where you be­come re­liant on credit.

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