South Africans have a right to be told why their credit applications have been turned down, advises consumer journalist Wendy Knowler.
While credit providers such as banks, cellphone companies and retail outlets have the right to reject a credit application, they have to offer reasons as to why.
I don't think many South Africans realise that you don't just have to accept a rejected credit application.— Wendy Knowler, consumer journalist
They are legally obliged to tell you the reasons if you ask. In most cases they won't tell you if you don't ask.— Wendy Knowler, consumer journalist
In terms of the National Credit Act (NCA), Knowler says consumers have the right to be provided with the reasons why their application was declined.
Credit applications are often rejected because applicants don't meet the criteria of creditworthiness or due to an adverse listing on your credit record, she says.
A rejected credit applications is a red flag for a consumer to investigate their credit record for any fraudulent activity against their name.
Less than 5% of South Africans regularly check their credit records... 70% of those who lodge a complaint about an unjustified adverse listing have them removed.— Wendy Knowler, consumer journalist
WHERE TO CHECK YOUR CREDIT RECORD FOR FREE
The NCA entitles you to one free credit record check a year, with each bureau. Here are the contact details of four major credit bureaus:
TransUnion: www.mytransunion.co.za, 0861 886 466
Experian: www.experian.co.za, 0861 105 665
XDS: www.xds.co.za (011) 645 9100
- Compuscan: www.compuscan.co.za 0861 51 41 31
Adverse listing on your credit record?
If you disagree with a listing you can lodge a dispute with the credit bureau. If, after 20 days, the adverse listing remains, you may approach the Credit Ombud for help.
Call 0861 662 837, e-mail Ombud@creditombud.org.za or sending an SMS to 44786 and they will call you back.
South Africans also have the right to request a quotation from the potential lenders they consult.
The NCA calls it a “pre-agreement” statement and quote. The quotation shows the borrowed amount, deposit payable, if applicable, interest charged, period of repayment, date of first installment, date of last installment, as well as extra charges such as initiation fees, monthly service fees and credit life insurance.
These quotations are valid for five business days, in terms of the act.
Requesting a quotation helps consumers weigh up their credit options without any obligation.
HOW YOUR CREDIT SCORE IS CALCULATED:
Our credit information, along with employment history, income, affordability assessments and the type of credit we apply for, is summarised on our credit profiles.
Each credit bureau calculates a credit score - a three-digit number - for every credit active consumer, using a complex formula that evaluates how you pay your bills, how much debt you carry and how all of that compares to other credit active consumers.
In effect, it reveals – in a single number – what your credit report says about your management of your existing credit.
Key factors which affect you credit score:
Account payment history: how you manage your accounts and whether or not you pay the entire installment amount on time.
Debt level: how much you owe and how much of your available credit you’re using.
Negative information: publicly available information in your credit record, such as bankruptcies and judgments, indicating you did not honour a particular debt obligation.
Length of credit history: how long each of your accounts has been open.
- Account application and enquiry activity: how many account applications you submitted within a short period of time, and how many new accounts you opened.
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