Credit Records & Clearing Adverse Credit Listings in South Africa

Life’s journey certainly gets a little more exciting for graduates: after entering the job market, landing a dream job and earning a salary, your focus starts shifting some first big purchases, like a car or a home. But, even with a substantial income, paying for those items in cash isn’t always a feasible option, and you might look to taking out a loan to help you out. However, life is also filled with unexpected twists and turns, and it might get to a point where the repayments get overwhelming to the point where they are unaffordable and you get blacklist by a creditor. Fortunately, LAW FOR ALL is here to help you weather the storm with our handy guide on all you need to know about credit listings and clearing adverse credit listings (no one wants to be blacklisted!).

A Nation in debt

Sadly, South Africa is known as one of the most indebted countries in the world. While it can be chalked up to various factors – citizens face the pressure of trying to keep up with increasing living costs and very often overspend –  the fact remains that many people aren’t necessarily the most financially savvy when it comes to taking out loans or buying on credit.

 

Wow, I didn’t know that… I really don’t want to be blacklisted!

Luckily, with the proper knowledge and right legal guidance, you don’t have to be.  There are strict credit laws that not only protect consumers against being taken advantage of but also promote the general economic welfare of the country. When it comes to managing debt, knowledge is power! It’s important for consumers to know about the different credit bureaus, how to request their credit reports and how bad consumer listings affect you. We know it can be a little confusing, so we break down all the ins and outs below.

The major credit bureaus in South Africa

The credit bureaus play a vital role to keep things fair and reasonable. They essentially gather information about a consumer’s credit history and keep a detailed record of personal information, accounts and how well debt is paid. Credit providers can access any consumer’s credit record and must consider the data (and some other factors) to determine risk and affordability before giving more credit.

There are eleven registered credit bureaus in South Africa, the major ones being TransunionExperianCompuscan, and XDS. For a long time, the only credit bureau was ITC (now known as Transunion), and to this day, South Africans still use this term to refer to the credit bureaus in the country.

How to check your credit record and why it’s important

Consumers have a legal right to request a free credit report once every year so they can learn more about their credit status. Thankfully, it’s as easy as giving the credit bureaus a phone call or visiting their websites.

One of the many reasons why consumers need to check their credit profile regularly is to ensure that no one has fraudulently applied for credit in their name (identity theft in South Africa is a real problem). Of course, if a consumer has been “blacklisted” or has adverse listings, it could raise red flags and creditors could refuse to give credit. A consumer’s credit record will reflect all their credit applications, credit agreements, defaults made on credit payments, debt-rearrangements, court orders etc. and will likely influence decisions made by landlords, insurance companies and even some employers as well.

Our partners, DebtBusters, take a closer look at understanding debt:

What if something doesn’t look right on my credit record

If a consumer spots any irregular listings or their credit report, they have a right to dispute incorrect information (more on this later) and ultimately have it removed.

Understanding your credit report & clearing listings

The credit bureaus must legally retain certain credit information for a specific period.  New regulations now make it possible for adverse information to be removed when the debt has been settled. Once a consumer has paid a debt in full, the creditor has 7 days to inform the credit bureaus. The bureau will then have a further 7 days to remove the information. According to the South African Consumer Protection Agency, these are the primary credit bureau listings:

Default Listings – default data is listed on a consumer’s profile if they have failed to pay a debt to a bank or store and failed to respond to demand letters. This type of listing remains on a credit profile for 2 years. If a consumer continually pays their accounts late, this behaviour could also be listed and will reflect for 1 year. Default listings are removed once the debt has been settled.

Civil  Court Judgment –  a judgement is granted by a civil court of law upon application by the credit provider for unpaid debt. This listing remains on a credit profile for a maximum of 5 years or until the judgement has been rescinded by the court or abandoned by the credit provider, or the judgement debt settled in full.

credit-bureau-listings

Administration Order –  this is a voluntary application by the consumer to avoid legal action by credit providers. This type of listing usually reflects for up to 5 years or until the order is rescinded by the court.

Sequestration Order –  a sequestration order is granted upon application by a consumer to be declared insolvent, have a curator appointed to manage finance and sell possessions to settle the debt. A sequestration order will reflect for 5 years or until a rehabilitation order is granted. The rehabilitation order will reflect for a further 5 years.

Debt Review –  this is also a voluntary application by the consumer who cannot afford to maintain their credit obligations and wants to avoid legal action by using a Debt Counsellor to negotiate new payment arrangements with credit providers. This listing will stay on a credit profile until a clearance certificate has been issued.

Other information that may appear on a credit profile includes enquiries about a consumer’s credit record, trace alerts and consumer remarks.

Right, but how do I dispute an incorrect credit bureau listing?

Consumers often don’t realise that their credit profile contains inaccurate information until a new credit application is declined or credit is offered on less favourable terms. Thankfully, consumers can dispute adverse or negative information with the specific bureau that issued the credit report. As with most disputes, it’s important to gather as much evidence as possible. While each bureau has its own set of steps to follow to have the incorrect information removed, consumers usually have to log a dispute via a call centre or online. The bureau will request supporting documents and will investigate, which usually takes a maximum of 20 business days. If there is significant supporting evidence, the bureau will remove the information.

Legal tip:  Should you feel as though your dispute was unfairly resolved, you can approach the Credit Ombudsman for assistance. 

A financially savvy future

Remember, aim for a financially savvy future!

Ultimately, the more you know, the more chance you have of not running into some serious credit issues and mitigating your credit risk, which as mentioned above, can affect many aspects of your life.

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We’ve got your back!

LAW FOR ALL’s experienced lawyers can provide legal advice and guidance on matters relating to debt. When it comes to managing debt- through debt review, sequestration or administration, we team up with DebtBusters. What’s more, we offer free credit checks and advice on listings. Be sure to have a look at LAW FOR ALL’s comprehensive policies. Sign up today!

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