The past few months have had consumers eagerly waiting to hear how their ‘bad’ credit records will disappear as a result of the DTI’s Removal of Adverse Information Project which has now been given the go-ahead by Cabinet.
Before consumers get too excited at the prospect of more credit for Christmas shopping, it is vital that everyone understands that exactly which information will be removed and when this will happen, and this is yet to be finalised. The public comment process is still underway and it is likely that Christmas will come and go before the amnesty process is implemented.
‘We have found that many consumers, both via our call centre and our outreach programmes, are already asking questions about the proposed removal of adverse information from their profiles,’ says Credit Ombud Manie van Schalkwyk. ‘The removal of specific adverse information from a consumer’s credit profile, does not mean that the entire credit history of that consumer just goes away,’ he adds.
There are some major misconceptions coming through from consumers about what the Credit Amnesty will mean to them:
My debt will be written off and I will no longer be liable for paying off their debt.
Just because the listing on the credit bureaux can no longer be seen, it does not mean that the actual debt also disappears. The Credit Amnesty will only remove credit information i.e. listings on the credit bureaux, not actual debt owed. In fact, credit providers may take legal action to recoup their money from non-paying consumers.
When a default listing is removed, there will be no other record that I was in arrears on my account.
Even though adverse listings will be removed through the ‘removal of adverse information process’, it does not imply that no one will have any knowledge of how you conducted your payments. Your credit provider will have a history of how you paid your account and they may decide not to grant you further credit or increase your limit if you did not conduct your payments well.
‘On the up side, those consumers who have conducted their accounts well can take advantage of the fact that there will be a history of their good conduct. Having a good credit history will without doubt stand them in good stead when they try to access credit to buy a home, pay for their children’s education or even to secure employment,’ adds Van Schalkwyk.
It will be easier for me to get a loan
You will still have to prove that you can afford the instalments on your loan – and without full credit information to guide them, credit providers may actually become stricter and even charge higher rates, because of the greater potential risk of bad debt.
Consumers now have the opportunity to take ownership of both their debt and their credit profiles, and would be well advised to take these steps to repair or improve their own credit records, without having to wait for an amnesty to rescue them:
· Get a free credit report from the credit bureaux (you can find all their contact details on www.creditombud.org.za)
· You have the right to challenge any information you believe to be unfair or inaccurate – if you are not happy with the response of the credit bureau, you can escalate your query to the Credit Ombud.
· If you cannot afford to repay your creditors, draw up a strict budget, work out the maximum you can afford, and then negotiate with your credit providers to pay your debts.
· Pay at least the minimum due as agreed with your credit provider
· Always pay your accounts on or before the due date
· Make sure that you close any accounts you are no longer using (the number of accounts you have open may affect your credit score)
· Reduce limits on credit cards if you do not use them or need them
Consumers can contact the office of the Credit Ombud for free assistance on matters relating to incorrect or unfair listings on the credit bureau or any problems that they may experience with credit providers, such as overcharging or garnishee orders. The office can be contacted on 0861 66 28 37 or visit their website on www.creditombud.org.za.
Tel: (011) 781 6431
Cell: 071 687 7594