FOUR SCORE KILLERS
You’re entitled to one free credit record a year from one of the credit bureaus but few people make the effort. In the first quarter of this year only 196 920 consumers requested their credit records, according to the NCR’s Credit Bureau Monitor, although there are more than 25 million active credit users in SA.
When you request your credit score you can check which of the following four factors are counting against you and then take steps to improve it.
YOUR PAYMENT HISTORY
Be sure to pay your full monthly instalments on time every month. The most common reason for SA consumers’ bad credit scores is failure to pay the full monthly instalment on their credit agreements, Matthys Potgieter from DebtSafe says.
What can you do? If you’re unable to keep up your monthly instalments, don’t hesitate to talk to the credit provider. It’s also in their best interest that you pay off your loan so they’re generally agreeable to negotiating a lower monthly instalment over a longer period.
Consider talking to a financial planner or even a debt counsellor. Either can help you come up with a plan to pay off your debts, even if you don’t go into official debt counselling.
Each time you apply for credit the credit provider checks your credit record. This leaves a record of why and what you’re applying for. If there are too many of these enquiries from credit providers it makes your credit record look bad. The more credit you apply for, the bigger the risk you appear to be to credit providers.
What can you do? Don’t apply for credit often. For example, you don’t need several retail accounts.
Legally, nonpayments must be indicated on your record for a year. More serious transgressions, such as being placed in administration or under sequestration, stays on your record for five years.
What can you do? Pay debt in full so any indication of nonpayment can be removed from your record. If the negative information stays on your record for longer than the legally stipulated year, contact the bureau in question.
It must issue you with a reference number and is legally obligated to correct the record within 20 days. Should it not do this to your satisfaction, you can approach the Credit Ombudsman (creditombud.org.za).
TOO MUCH DEBT
If you can’t pay your debt, this will show on your credit record and it could be difficult to get even a cellphone contract.
What can you do? Don’t get into debt if you know for a fact you can’t afford it. It’s your responsibility to be honest when you apply for a loan – don’t lie about your expenses and financial situation, Potgieter says.