|Credit Bureaus and Debt Management|
|Written by Des Le Roux|
|Tuesday, 22 September 2009 10:52|
When last did you check your credit report? Do you know how to do this? Did you know that you're able to do this? Whenever I meet new people, it doesn't take me long to ask these questions. You're probably asking yourself "Now why would she be asking such questions?"
It's often because the topic of conversation turns to the economy, the interest rates, tax and inevitably, credit bureaus.
I find it amazing that most people I know have heard of credit bureaus, but only in a negative way. When I tell them that credit bureaus and the information that they have about us can assist us, it's usually quite amusing to see the scepticism on their faces. It's even funnier when I tell them that I'm listed on the credit bureau and that it's likely that they are too. This statement is usually met with a flat denial and a loud assertion that they are not listed because they pay their accounts on time.
This illustrates that there are many misconceptions about credit bureaus. Now don't get me wrong - I'm not an avid supporter of credit bureaus, but they are here to stay, so I suggest you get to know as much as possible about them and how they affect your life. Being listed on the credit bureau does not have to be a bad thing. It is estimated that about 85% of people listed have positive listings.
We have two credit bureaus in South Africa - Experian and TransUnion ITC. I have accessed my credit records from both via the Internet and have found the information on each to be quite different, so I access both these databases regularly to keep myself updated on my credit reports and credit scores.
Did you know that it is your right to know what information is on your credit report? You can request a credit bureau to provide you with information on your credit profile. They charge a nominal fee and will provide you with the information once they have confirmed your identity. You can also call them for an explanation of anything you don't understand about your report. Every time a credit lender makes an enquiry about me at a credit bureau, the relevant bureau informs me, either by sms or e-mail.
You also have the right to address any incorrect information with a credit bureau. A few months ago, when I checked my credit report with one of the bureaus, I found incorrect information. My name was listed as a paid up account holder with a certain retailer, yet I have never had an account with them. I contacted the credit bureau concerned, since, according to their website, they will investigate the matter with the credit lender concerned and amend or delete the information accordingly if it is proven to be incorrect.
However, I did not find it that easy to sort the matter out. The credit bureau referred me to the credit lender, who had no record of me. I have been trying to sort this matter out for a few months now, though I must admit that I haven't been trying too hard. I suppose it's because the listing is not a negative one. But if I should find that the matter cannot be resolved after all my attempts, I will be able to contact the Credit Information Ombud to assist in resolving the matter.
So what are these credit bureaus all about? They provide a credit lender with information on how you manage your commitments to creditors. This information tells credit lenders how you have been paying your other accounts and is supposed to assist them in their decision to grant you credit.
However, having a positive credit record does not automatically mean that the credit lender will grant you credit. They may refuse, for example, because they think you are overcommitted. Whatever the reason though, you have the right to query their decision and even appeal it, since they could have made a mistake. This is what happened to me a few months ago when I applied for credit. The retail company refused my application because they felt that I was overcommitted. I appealed their decision, since I did not have any retail accounts at the time. When they investigated, they found that they had made a mistake in the application of a formula they used to assess whether they would grant me credit or not.
If the credit lender has declined your application, don't bother asking the credit bureaus for the reasons - only the credit lender can tell you why they have refused your application. If one company refuses to grant you credit, another may decide otherwise. I have found this to be the case, since the various credit lenders take different factors into consideration when they decide to grant you credit or not.
Do you remember how long it used to take to apply for credit? One would have to wait for a few days before hearing whether your application had been approved, because the credit lender would have to telephone your various references for information on how you have been paying your accounts.
One of the main advantages of a credit bureau is that one is able to apply for credit quickly, since the information is immediately available to the credit lender. How many of you have been granted credit without ever meeting the credit lender? This has happened to me on a number of occasions. If it wasn't for my credit report which provided important details to the potential credit lender, I may not have been granted the credit or I may have been charged a higher interest rate.
I have always found it useful to know my credit report, especially when applying for credit. I have been able to negotiate favourable interest rates with financial institutions, based on my good credit record. I hope you'll be accessing your information soon and using it to your advantage as well.
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About the author: Des Le Roux is a lawyer with extensive experience in the Human Resource field. She has worked as a Labour Relations Adviser at the Cape Town City Council, as a Legal Adviser to Parliament and as the Manager of Procedural Services in the National Council of Provinces. She is a skilled consultant, trainer and facilitator, and has worked extensively in the public and legislative sectors, both in South Africa and on the continent. She has consulted, amongst others, to the Parliament of Namibia, the Kenyan National Assembly, the Lesotho Parliamentary Reform Committee and the new Government of South Sudan.