1. What is a credit report?

Your credit report is a document that shows all the credit or accounts you have and how well you pay your accounts. It includes your credit score, your personal information (your full names, ID number and address), your property information, any judgments or court orders against you, and all enquiries that have been made on your profile.

 

  1. What is a credit score?

Your credit score is a value that is calculated based on how well you pay your accounts. A “good” credit score depends on the model that is used by the credit provider. Not every credit provider calculates this in the same way. The credit bureau does not decide whether you qualify for credit – this decision is made by the credit provider based on your credit score which is determined by your own actions and payment history.

 

  1. What is a credit bureau?

You get your credit report from a credit bureau. A credit bureau is a company that receives, stores and reports information on how you manage your credit, including store accounts, loans and credit cards. Credit bureaus must operate in terms of the National Credit Act and must be registered with the National Credit Regulator.

 

  1. What does the information on your credit report mean?

Not all credit reports look the same but all of them include similar information.

A report is made up of different sections and normally includes the following information:

 

  1. Personal Information

Your personal details, including your name and ID number.

  1. Address and Telephone details

The most recent contact detail that the credit bureau has for you.

  1. Employment information

A list of all known employers where you have worked.

  1. Enquiry Information

All the providers who have requested your credit report.

  1. Property Information

A list of the properties that are registered in your name.

  1. Directorship Information

A list of the companies where you are registered as a director.

  1. Your Credit Summary

This section can include the following information:

 

  1. Accounts

These are all of the accounts that are listed on your report. Some of these accounts may be closed already but will still show your payment history.

  1. Enquiries

These are the companies that have made enquiries on your account. This information can go as far back as 2 years. It is important to make sure that you know who they are to make sure that no one is using your ID to commit fraud. For example, if you have never applied for credit at a store but they have made an enquiry on your profile, it might mean someone tried to open an account in your name.

  1. Judgments

Here you will find any judgments that have been granted against you. A judgment is granted by the court and is public information. That means that anyone can view that information. A credit provider will consider this information when deciding whether to grant you a loan or not. Previously a judgment stayed on your profile for 5 years but in terms of the amendments to the National Credit Act that will become effective soon, all paid up judgments will be removed from your record as soon as you submit proof that it has been paid.

 

  1. Notices

This includes administration orders, provisional sequestration orders, final sequestration orders and rehabilitation orders.

 

  1. Defaults

A default is reflected when you pay your account late or when you make no payment at all. The credit provider is then allowed to start with collection actions against you. This can also include legal action, which can later result in a judgment. That is why it is important to always communicate with your credit provider if you are not able to make a payment. Previously a default would stay on your credit profile for 2 years but when the amendments to the National Credit Act become effective, the default will also be removed as soon as you submit proof that it has been paid up.

 

  1. Collections

This section includes detail of any collection information that may be recorded on your profile. This information is normally submitted by a company that collects bad debts.

 

  1. Trace Alerts

A trace alert is when a company that you have a loan with has asked the credit bureau to notify them when your contact details change. This is normally when you are in arrears and they cannot make contact with you to make a payment arrangement.

 

  1. Total balance exposure

This is the total amount owed by you on all your loans. It is how much debt you have.

 

  1. Total monthly exposure

This is the total of all your monthly repayments that you must make on all your loans. It is the sum total of all your monthly installments.

 

  1. Total overdue amounts

This is the total overdue amount on your loans, when you have missed a payment or not paid (or underpaid) on your installments.

 

  1. Specific accounts

Each account will be listed under this section and your payment history will be shown. Every report is different, but it will look something like this:

 

     Standard Bank Master Card

Account Number 1234567891234567 Current Balance R 2,623.71
Account Status Open or current Overdue Amount R 0
Date Opened 2013-07-01 Payment Frequency Monthly
Monthly Installment R 423.52 Payment Status Current
Account Type Credit Card Last Payment Date 2013-11-25
Opening Balance R 10,000 Status Date 2013-11-30

 

Every account will also show a payment profile, which looks something like this:

      2013 2014
Sep Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
ND 0 0 0 0 0 1    2 3    4   L 0 0 0 0 C

 

The specific report will provide you with a legend explaining what each number or symbol means – for example:  0 = up to date; 1 = 30 days no payment; 2 = 60 days not payment; L = handed over for legal collections, C = closed; etc.

 

  1. These are some other important terms to help you understand your credit report better:
  • An Administration Order is an order by a court to help you to repay your debt. If you (a) cannot pay all your debt; and (b) your debt is less than R 50 000; and (c) you do not own any property that can be sold to pay the debts; you can apply for an Administration Order.
  • Adverse information is a negative classification on your report such as ‘delinquent’, ‘default’, ‘non-contactable’, ‘absconded’, ‘slow paying’, ‘written off’, ‘repossession’, and ‘handed over’.
  • A Creditor is a person or a company who you owe money to.
  • Debt restructuring is when your repayments are reduced to make it easier for you to repay your loans. This does not mean that your debt becomes less, it just means that your repayment has been recalculated – for example by increasing the time period over which you must repay the loan.
  • Debt Review is when a debt counsellor is appointed to manage the repayment of your loans. Repayments are normally made through a PDA (payment distribution agency). This process is regulated by the National Credit Act.
  • A Debtor is someone who owes money, on, for example, a loan, account or card.
  • To Default means to fail to make a payment on time or at all.
  • A Delinquent Payer is someone who does not keep to his/her repayment arrangements.
  • Liquidation is when a business is not able to pay its debts and its assets are sold to pay its creditors.
  • Months in Arrears is the number of months that you are behind with your payment on an account.
  • Negative Information is information that reflects the times when you did not pay your installment in full or at all. This includes: defaults, delinquencies, judgments, debt that is written off and late payments.
  • Positive information refers to the detailed information that shows your current accounts, balances, credit limits and repayments that are up-to-date.
  • Sequestration is where a curator is appointed to manage your finances on your behalf. This is normally where (a) you do not qualify for an administration order, and (b) you can demonstrate that there is enough money available to make an offer of settlement to your creditors.

 

To be continued……