Less than one percent of credit-active consumers check their credit reports. The latest Credit Bureau Monitor (CBM) compiled by the National Credit Regulator shows that the number of credit reports issued by credit bureaus to consumers decreased from 144 210 at the end of December 2015 to 129 458 to the end of the first quarter of this year. As a percentage of the 23.88 million credit-active consumers in South Africa, 129 459 is a paltry 0.5 percent.
You are entitled to one free credit report a year from each of the consumer credit bureaus: Compuscan, Experian, TransUnion and Xpert Decision Systems. The National Credit Act (NCA) gives you this right. You are also entitled to dispute any information on your credit report.
The latest CBM says that, of the total number of credit reports issued in the quarter to the end of March 2016, 73 percent (93 977) were issued free of charge, and the remaining 27 percent (35 481) were paid for by consumers.
The Credit Ombud, Nicky Lala Mohan, says it’s as if consumers would rather not know what’s on their credit reports. “This is a culture that we need to change. The best advice we can give consumers is: check your credit reports regularly.”
The reality is that most consumers only discover inaccuracies on their credit reports when they find themselves victims of identity theft or have difficulty acquiring credit, because there is negative information on their reports, the Credit Ombud says.
Having to resolve a dispute about information on a credit bureau report can frustrate the process of buying a home or a motor vehicle, Lala Mohan says.
Salem Dyafta, the brand manager at TransUnion, says the bureau is concerned that so few consumers check their credit reports regularly. “And even fewer have any idea what their credit score means and why it is so important.”
Dyafta says the reasons you need to check your report regularly are:
1. Your credit profile changes every time a credit provider submits information to a credit bureau, or makes an enquiry about you. By checking your report regularly, you will know exactly what information is listed on it, she says.
An enquiry is the term used for when anyone views your profile. Your profile is confidential and can be viewed only for what the Act calls “prescribed purposes”, such as an affordability assessment.
Every time you apply for credit, this is noted on your report, and it has an adverse effect on your score, because it indicates an increased appetite for credit.
It’s important to know who is viewing your report, because if you have not been shopping for credit, but a credit provider has viewed your report, this could indicate that someone is posing as you in an attempt to access credit in your name – this is identity theft.
2. You will be better protected against the fallout from identity theft, because you will be able to identify any unauthorised credit activity on your report, she says.
Typically, you find out you’re the victim of identity theft when a debt collector or creditor seeks payment for a credit agreement of which you have no knowledge. You then have to prove that you are a victim of fraud. But if you are regularly checking your report, you should detect fraudulent credit (accounts or loans) and raise the alarm.
3. You’ll know what creditors know, and if your report is clean and your credit score is high, you should be able to negotiate more favourable terms from a credit provider.
A “clean” report is one that is free of adverse listings and default judgments. And the monthly repayment history on all your accounts will show that you have not missed any payments over the past 24 months.
4. You will see any negative remarks made by a creditor about you, and if these are inaccurate, you will be able to have them corrected before you apply for additional credit. You can’t fix what you know nothing about, Dyafta says.
A negative remark is usually in respect of your behaviour as a consumer of credit. For example, a creditor may describe you as a “slow payer”, or it may note that an account has been “handed over” to debt collectors or for legal action. If this information isn’t accurate, you should dispute it, because it will adversely impact your score.
5. People make mistakes, Dyafta says. Checking your credit report will enable you to ensure that all the information listed in your report is up to date and correct.
If you spot any errors on your report, lodge a dispute with the credit bureau concerned. The bureau has 20 business days to investigate. The bureau will report back to you with its findings.
If you dispute the findings, you can lodge a complaint with the Credit Ombud.
In terms of the NCA, the role of the Credit Ombud is to resolve disputes between consumers and credit providers or other players in the credit industry, including credit bureaus. It’s free to use the services of the Credit Ombud.