FAQ

General FAQs

INCORRECT INFORMATION ON YOUR CREDIT REPORT?

Many consumers are unaware that the information in their credit report is inaccurate until it is too late – when they are either refused credit for which they have applied; or when the credit provider offers them credit on less favourable terms than they would otherwise have received.

That’s according to Salem Dyafta, Brand Manager: Consumer at TransUnion, South Africa’s largest credit bureau, who said a simple solution to the problem was to check your credit report regularly. This is particularly necessary before applying for credit to purchase a big-ticket item such as a home, car or furniture; or even before applying for a credit card or to increase your credit limit on any of your existing accounts

According to the latest available Credit Bureau Monitor (Q4 2015), just less than 0.4% of the over 23-million credit active consumers obtained a free copy of their credit reports in the three months reviewed by the Monitor. This is despite the fact that every consumer is entitled to one free copy of their credit report from credit bureaus like TransUnion every 12 months.

“Because your credit report summarises your financial behaviour such as whether you regularly pay the full instalment on your accounts on time, inaccurate information in your credit report could paint a picture of your financial health that is not true,” she explained.

Information contained in a credit report is provided to the various credit bureaus by various service providers such as, but not limited to, financial institutions, retail stores, insurers and cell phone companies.

“Mistakes can be made. In fact, of the credit reports issued to consumers during Q4 2015, over 17% were challenged for alleged inaccuracies. Of these, nearly two-thirds were resolved in favour of the consumer,” Ms Dyafta said. “Consumers who regularly check their credit report are in a better position to make sure their report accurately reflects their credit history and behaviour. Then, if you find a mistake or information you don’t agree with, you can immediately take the matter up with the credit bureau. This is what is known as lodging or submitting a dispute.”

When submitting a dispute, it is important to provide the credit bureau with as much supporting documentation as possible to prove that the disputed information on your credit report should be removed. A lack of supporting documentation can result in a delay in resolving the issue.

Lodging a dispute with the credit bureau who issued the credit report is easy.

If you received your credit report from TransUnion, this is the process to follow to submit a dispute:

  1. Call the TransUnion call centre on 0861 886 466 to lodge your dispute; or you can log your dispute online atwww.mytransunion.co.za.
  2. You must log your dispute within three months of issue of the credit report that you are querying.
  3. Complete the Challenge Form, and submit it.
  4. A TransUnion call centre agent will contact you within 48 hours and give you a TransUnion reference number.
  5. Submit all your supporting documentation to TransUnion, including proof of ID and address.
  6. TransUnion will investigate your complaint. This will be completed within 20 working days.
  7. If any changes have occurred on your credit report – for example, if information on your report needs to be updated or amended – TransUnion will send you an updated credit report

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HOW LONG DOES NEGATIVE INFORMATION REMAIN ON YOUR CREDIT REPORT?

Your credit report is a record of your payment behaviour. It tracks all your accounts and indicates where, over a period of two years, you have missed payments or gone into arrears on an account. Then after two years, this adverse information simply disappears. Right?

“Yes and no,” said Salem Dyafta, Brand Manager: Consumer at TransUnion, South Africa’s largest credit bureau. “Your credit report contains all the positive, as well as negative information about your payment behaviour.

“In addition, it includes information which may, or may not be considered negative by a credit provider. Some of this information may remain on your credit report for a longer or shorter period.”

A court judgment, for example – where a court issues an instruction to you to pay an outstanding amount – will remain on your credit report for five years. If you pay the full amount owed before that time, the judgment will be removed from your credit report as soon as the credit bureau receives either proof of payment from the credit provider or a valid court order rescinding the judgment.

“It is therefore vitally important that consumers who have had judgments against them and have paid the outstanding judgment debt, check their credit reports to ensure that this negative information no longer remains on their credit record,” Ms Dyafta explained.

“It is important to remember however that judgment debt is usually higher than the original amount owing. This is because it includes the original debt plus any other costs that may have accrued, including interest and legal charges.”

Other potentially negative information which could be contained in your credit report includes:

  • Enquiries. Every time a consumer applies for credit, the credit prover will make an enquiry about the consumer’s credit record. This information is recorded and will reflect on the consumer’s credit report for one year. A high number of these enquiries could indicate that you are “shopping around” for too much credit, which could indicate that you may be in financial difficulties.
  • Complaints. If you lodge a complaint about your credit report and your complaint is rejected, this information will be reflected on your credit report for six months.
  • Adverse classifications relating to an enforcement action taken by a credit provider. If you don’t pay your account and the credit provider takes action against you, such as sending you a letter of final demand, this information will remain on your credit report for one year. If you pay the full amount owed before that time, the information will be removed from your credit report as soon as the credit bureau receives proof of payment from the credit provider.
  • Adverse classifications relating to consumer behaviour. These classifications are more subjective than those relating to enforcement actions. For example, if you continually pay your accounts late, a credit provider could have you classified as a “late” or “tardy” payer. This classification remains on your credit report for one year. If you pay the full amount owed before that time, the information will be removed from your credit report as soon as the credit bureau receives proof of payment from the credit provider.
  • Debt restructuring. Information relating to applications for debt restructuring remains on your credit report until a clearance certificate is issued.
  • Sequestration. A sequestration order remains on your credit report for five years, or until a rehabilitation order is granted. A rehabilitation order will continue to reflect on your credit report for a further five years.
  • Administration order. If you have applied to be placed under administration, this will remain on your credit report for five years or until the administration order is rescinded by a court.

Other information that may appear on our credit report includes:

  • Trace. A trace alert is placed on your credit report by a credit provider who has been unable to make contact with you and has asked to be notified when any updated contact information is loaded on to your credit report.
  • Consumer remarks. You can ask that TransUnion include an explanation of facts or conditions that affect you on your credit report. For example, if your identity document has been stolen, you may want this information included in your credit report to try and prevent your identity being used fraudulently.

If you believe there is any information on your credit report that should not be there, or that should have been removed, you should immediately lodge a dispute with the credit bureau. The bureau is obliged to investigate and respond within 20 days.

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EVER WONDER HOW A LENDER DECIDES WHETHER TO GRANT YOU CREDIT?

Every creditor has its own definition of what is considered "good" vs. "bad" credit. With more lenders today keeping credit standards tight, you need to do everything possible to make sure your credit stays in great shape.

Remember, credit scores are not permanent. If yours is in bad shape, a little work will go a long way to improving it for the long term. Credit scores give lenders a fast and objective measurement of your credit risk. Before the use of scoring, the credit granting process could be slow, inconsistent, and unfairly biased. Credit scores have made big improvements in the credit process.

Using credit scoring, lenders can focus solely on the facts related to credit risk, instead of their personal feelings. Factors like your gender, race, religion, nationality and marital status are not considered by credit scoring. If you have had poor credit performance in the past, credit scoring doesn't let that haunt you forever. Past credit problems fade as time passes, as long as good payment patterns show up on your credit report.

SO you can always turn things around for the better. Additionally, lenders who use credit scoring can approve more loans, because credit scoring gives them more precise information with which to make credit decisions. It allows lenders to identify individuals who are likely to perform well in the future, even though their credit report shows past problems, even people whose scores are lower than a lender's cutoff for the "automatic approval" benefit from scoring.

Many lenders offer a choice of credit products geared to different risk levels. Most have their own separate guidelines, so if you are turned down by one lender, another may approve your loan. The use of credit scores gives lenders the confidence to offer credit to more people, since they have a better understanding of the risk they’re taking. While scores may be particularly important to homebuyers and other borrowers, they should be of interest to all consumers. Even if you don't plan to borrow money, you may find yourself in a situation where you need credit—to take advantage of an unexpected financial opportunity, or to get through an emergency. And lenders aren’t the only ones who look at your credit history to make decisions.

Some employers, insurers, and even landlords refer to credit reports when deciding whether or not an applicant is qualified. Knowing where you stand allows you to formulate a plan of action to improve your credit record. Consumers with a good credit history have many more options available to them for achieving their financial goals.

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