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Consumer Affairs
Thursday, May 23, 2013 - 09:27
Free annual check

The National Credit Regulator (NCR) has mandated that consumers be able to access one free credit report per year. A credit report provides a snapshot of a person’s credit accounts, repayment records, and how well they are coping with their finances.

Lenders look at a consumer’s report, along with information on the application form, to decide whether to approve the consumer credit. It must also be noted that, over and above consumer credit information, an affordability assessment is conducted to ensure that, if the consumer is approved for credit, they can afford to repay the debt.
A consumer’s affordability and credit standing will also assist lenders in their decision on what interest rates to charge the consumer.
A common misconception exists that information bureaus decline access to credit. This is not true. Information bureaus do not decide whether someone obtains credit or not: only credit grantors make lending decisions. An information bureau simply collects information from credit grantors such as banks, savings and loans institutions, credit unions, finance companies and retailers. Information bureaus store and aggregate this information in the form of a credit report which gives an overview of how well a consumer is meeting their credit repayment obligations, then provides it to credit grantors so they can assess an application by a consumer for a new credit account or loan. Each credit grantor decides what standards the applicant must meet in order to be granted credit. The bureau does not track the decision a grantor makes after ordering a credit report, favourable or not.
Hayden Marimuthu, the General Manager of Audit and Administration at Xpert Decision Systems (XDS), stresses that, “Consumers have the right to access their credit report for free at least once a year and that consumers are doing a great dis-service to themselves by not exercising this right.” Yet according to the 2012, Third Quarter Credit Bureau Monitor report, out of the 19.69 million credit active users in South Africa, only 393 708 credit reports were issued to users for the first nine months in 2012. This amounts to only 0.02 % of clients.
He says that “the statistics prove the lack of consumer awareness around the importance of knowing credit status. More people need to know about their credit standing so that they are able to make an informed decision when applying for credit.”
The Credit Bureau Monitor report also shows there were 15 356 disputes about information held in consumer credit records for the quarter ended September 2012. These disputes arise as consumers query inaccuracies in the information. The number of disputes could increase as more individuals access their credit reports and discover that information contained in them is inaccurate.
This is why consumers must explore their credit report first and make sure everything is accurate and up to date before going to the bank.
In any case, even consumers who do not plan to borrow would be well advised to check their status. Remember, there is no charge for requesting one report per year.
 

Copyright © Insurance Times and Investments® Vol:26.5 1st May, 2013
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