A credit report is a description of your credit history. It shows when someone enquired about your credit record, how well you make your repayments, and if any action has been taken against you because of unpaid debts. Lenders use this information when assessing your credit application, so that they can make responsible decisions when offering credit.
What is consumer credit information?
- A credit report contains consumer credit information
- Consumer credit information includes –
- your name, ID number, marital status, address & contact details
- details of the accounts you have, how you manage them (account history)
- details of any judgments taken against you for unpaid debts.
- details of enquiries done on your credit report
What are enquiries?
- Recorded whenever there is a request for your report from a credit bureau
- Your credit report contains the number of enquiries made, the enquiry date, who did the enquiry & contact details if available
What is an account history?
- A history of how you have paid your accounts over the last 12/24 or 36 months
- Reflects both positive & negative payment trends
- Helps in facilitating the granting of credit, if positive
- Indicates if over extended on accounts
What is a default?
- Should you fail to meet your debt repayments obligations, your creditor may list a default notation on your credit report with a credit bureau
- No court intervention
- There are two types of default notations –
- Adverse classifications of consumer behavior eg: ‘delinquent’, ‘default’, ‘slow paying’, ‘absconded’ or ‘not contactable’, (1 year).
- Adverse classifications of enforcement action taken by the credit provider eg: ‘handed over for collection’, ‘legal action’, ‘write off’, ‘repossession’, ‘credit card revoked’ (2 years).
- If you pay the outstanding debt, the credit provider will update your records with the credit bureaus to reflect a “paid up” status.
What is a judgment?
- Legal action taken by a creditor if you don’t meet your repayment obligation
- Failure to respond to the final notice, the creditor may issue a summons through the court
- Failure to respond to the summons may result in a judgment being granted against you
- Stays on your credit report for 5 years, after which it automatically falls away
How can a judgment be removed?
- Make arrangement to pay off the debt
- Request a settlement letter from the credit
- Obtain the services of an attorney
- Attorney to apply to court for a rescission (reversal) of the judgment
- Send copy of rescission order to the credit bureaus to update your records
- A notice is a legal action that has been taken against you after you have failed to pay a debt/outstanding account
- Notices include administration orders, provisional sequestration & rehabilitation orders
- Administration orders remain on your credit report for 10 years
- Rehabilitation orders remain for 5 years
- Sequestration remain for 10 years (if no rehabilitation order is granted)
What is an administration order?
- If you can’t meet your debt re-payment obligations, you can apply in court for an administration order
- Your debt must not exceed R 50 000
- An administrator will be appointed to your estate
- You will be ordered to make regular payments to your administrator
- The administrator will distribute your payments to your creditors
- The order will be on your record for ten years
- NOTE: An administration order is not a solution to over indebtedness
How can an administration order be removed?
- Automatically removed after 10 years
- Alternatively you can apply for rescission –
- If you have settled all your debts in full;
- If you have not settled all your debts, you must prove that your are in a suitable position to resume your financial matters
- Once the administration order is rescinded send a copy to the credit bureau to update your records.
Sources of Consumer Credit Information
Consumer credit information is sourced from:
Public records (court records)
- Civil judgments
- Liquidation orders
- Sequestration Orders
- Rehabilitation Orders
- Administration Orders
- Debt counseling orders
- Banking & financial
- Micro finance & debt collection
- Telecommunication & cellular phone companies
The National Credit Act No. 34 of 2005
The Credit Bureau Provisions
The Act provides amongst others, for:
- Consumers to have free access to their credit report (once a year)
- Obligation on credit providers & credit bureaus to ensure data accuracy
- Mechanisms to prevent data inaccuracies
- Regulation of access to & use of credit bureau information outside of application as permitted in the Act & consistent with consumer consent
- Registration of credit bureaus, credit providers & debt counselors
- Prescribed data retention periods
Consumers’ Rights in Terms of the Act
Consumers have the right to:
- Be notified by the Credit Provider’s of its intention to report negative information on the consumer, to a credit bureau, 20 business days before the information is reported
- Receive one free credit report per year, thereafter a credit bureau may charge a fee for any further reports
- Challenge the accuracy of information kept by the Credit Bureau without a charge
- Be compensated by any person who reported incorrect information to a credit bureau, for the costs of correcting the information
- Receive a copy of any credible evidence in support of the challenged information from the bureau or, where no credible evidence has been received, have the information removed from the consumer’s records
- Confidential treatment of their information at CB’s
How long does information remain on my credit report?
The National Credit Act specifies the time period that credit information may be kept on your report, after which it must be removed from your credit report. Credit information will be held for the following periods:
- Category of Consumer Credit information
Maximum period on the credit bureau
Details and results of disputes lodged by consumers
- 18 months
- Credit enquiries
- 2 years
- Payment Profile
- 5 years
- Adverse classifications of consumer behavior (e.g. Default, Slow payer, Cheque account misconduct)
- 1 year
- Adverse classifications of enforcement action (e.g. Handed over; Write-off; Repossession)
- 2 years
- Debt Restructuring
- Until a clearance certificate is issued
- Civil Court Judgments
- The earlier of 5 years or until the judgment is rescinded by a court or abandoned by the credit provider.
- Administration Orders
- The earlier of 10 years or until order is rescinded by a court
- The earlier of 10 years or until rehabilitation order is granted
- Unlimited period
- Rehabilitation Orders
- 5 years
- Other information e.g. Collections
- 2 years
Tips on How to manage your Credit
- Draw up a monthly budget
- Plan your expenses over long & short term
- Read the application form carefully & ask for clarity on anything you don’t understand
- Don’t ignore letters of demand on overdue accounts
- Notify your credit grantors of changes in your address & employment details when you move or take on a new job
- Work out just how much more you’ll be paying by taking an item on credit.
- Leave room in your budget for emergencies
- Pay your account even if you don’t get a statement
- Pay your accounts in full & on time- ALWAYS
It’s imperative for credit active consumers to access their credit report at least once a year from the following credit bureaus