Taking the Credit
Applying for a loan?
Don’t know your credit status?
Lona Minton translates credit report gobbledegook
In essence, a credit report is a financial report card. An “A” student, who pays on time when borrowing money from financial institutions or retailers, will get a good credit rating. But a poor student, who habitually neglects creditors, could end up with a bad rating, and an “F” for future finance. That’s the simple part.
Now let’s look a little deeper. Creditors voluntarily subscribe to either of South Africa’s two major consumer credit bureaus- TransUnion ITC and Experian. So get your credit report from a source that consolidates both bureaus’ records.
Your report will have four key sections:
1. Identifying Information
Check that it’s accurate, but don’t be too concerned if there are few ID numbers variants or name spelling errors (these occur with varied reporting).
2. Public records
If you’ve played your (credit) cards right, this section will be blank. But if you’ve suffered insolvency, creditor judgment or default, it will reflect here. Rest assured that a judgment will probably only be listed on your record for five years, unless rescinded before. And a default remains for three years, unless settled on condition that the listing is removed. Consult a specialist attorney if you’re dealing with these matters.
3. Payment Profile Information
In this section, each account (or credit line) is listed with the creditor’s name (yours) and the account number. If you move, a creditor may transfer your account to a new location and assign a new number.
Each entry also includes:
- When you opened the account
- Kind of credit (instalment, such as bond /car loan, or revolving, such as retail store credit card)
- Whether the account is in your name alone, or linked with someone else
- Total loan amount highest balance on card
- Fixed monthly payments, how much is still owed, and how well you’ve paid the account
- Status of account (open, inactive, closed, paid, etc.) and how many months you’re in arrears, if at all
Here you’ll find a list of everyone who’s requested your credit report. Keep enquiries to a minimum - too many give the impression of “shopping” for credit. Plus, don’t “credit surf”, move balances from card to card, or take advantage of promotional low interest rates. In essence, start to view your credit status as an endangered species - conservation is key. And always conduct your credit affairs with a medium to long term view. Most importantly, if you keep your account up to date, and notify creditors when you move, you’re sure to get an “A” on your report, and therefore all the credit you deserve.