Take charge of your credit
Blurb: Do South Africans have a hard time following their own advice? Research in the credit information space suggests we don’t always take what we know to be the best course of action – even when it is to our benefit.
- 4 in 10 credit consumers self-report checking their credit reports in the last year
- 3 in 10 credit consumers admit NEVER checking their credit reports
- Data shows that only 3% of credit consumers check their reports annually, but this number is growing.
- You are entitled to 1 free copy of your own credit report annually, from each of the 5 consumer credit-listing bureaus.
According to a recent survey by Credit Bureau Association (CBA) member TransUnion, seven out of ten people (72%) believe that their credit score is important to them – but three in ten (33%) admit that they have never checked their report, and only four in ten (41%) have checked theirs in the last year.
The bad news
If that wasn’t alarming enough, further data – from the quarterly Credit Bureau Monitor (CBM) report released by the National Credit Regulator (NCR) – suggests these survey respondents are either not representative of the average credit consumer, or are actually over-reporting their history of accessing their credit reports. The CBM data shows there are over 24 million people who are credit active in South Africa – meaning they use credit like store cards and credit cards – but less than 3% of them check their credit reports annually. This is despite the fact that every credit consumer is entitled to access one free credit report a year from each of the bureaus.
The good news
One silver-lining in all this doom and gloom is that 2016 shows a 12% growth (quarter-on-quarter) of persons accessing their free credit report. Seventy-five percent of reports issued were done so free of charge.
Disputes over information on reports also increased in the latest reported quarter (Q2 2016); over 33 000 disputes were lodged against information held on reports. This doesn’t necessarily mean that more mistakes or errors are appearing on reports. Rather, viewed in conjunction with the growth in accessing of credit reports, it suggests that South Africans are becoming more pro-active in managing their credit.
“Checking your report is a good way to see both how certain accounts (and your management thereof) are affecting your credit score, and to spot any potential identity fraud,” says Jeannine Naudé Viljoen, executive manager of the Credit Bureau Association. “We want to see the number of free reports issued going up consistently, because it is a sign that people are taking responsibility for their own credit situations.”
“Even if the number of disputes rises as a result,” she adds, “this will ultimately help the credit information space to improve the accuracy of their data. And that means a more robust credit market overall, as credit providers use credit profile information as part of their legally mandated affordability assessments when deciding to grant credit.”
Education: the next hurdle
Persistent myths about credit reports continue to be an issue. Both anecdotal and survey data shows that many people still believe that being “listed” by a credit bureau is a bad thing. In truth, anyone who uses credit has a credit profile, and this profile contains information on both “good” and “bad” credit management. This includes whether you pay your accounts on time, in full, partially or late.
“Accessing your report is the first step in good credit management. It provides you with the full and real picture of your credit behaviour,” says Naudé Viljoen. “From there you can see, for example, which accounts are in arrears or otherwise negatively affecting your credit score. Then you can take action to fix it.”
“The bottom-line,” she adds, “is that you are not a victim in this scenario. If you have a so-called ‘bad’ score or report, you can make it better. You don’t need to pay anyone to help you improve your score, but accurate information cannot be removed from your report. The only effective way to get a good credit score is to manage your credit well. It’s all in your hands – and that should feel empowering to any credit consumer.”
Data for this release was taken from two sources:
- An August 2016 survey undertaken by credit bureau TransUnion. Their survey included responses from 1001 South African consumers (aged 18 years old and over).
- The most recent Credit Bureau Monitor (CBM) report, released by the National Credit Regulator (NCR) – Q2 2016
For a list of all credit bureaus and their contact details, visit cba.co.za
Released by the Credit Bureau Association