We explain how credit bureaus work in South Africa and what you need to know about some of the main credit bureaus in the country.
If all you know about credit bureaus is that they are organisations that collect and store consumers financial information and generate credit reports. You’ve scraped the surface and need to expand your knowledge on what they do and how they work.
What do I need to know?
It’s imperative you know more about such companies since they play a huge factor in the financial lives of many South Africans.
Credit bureaus sell your credit reports to banks and various credit providers. As a consumer, you’re entitled to a copy of your credit report, Trans Union, Clear Score and Compuscan give it to you for free.
Where do credit bureaus get our information?
The short answer to the question of where credit bureaus get consumer information is from other companies.
In the case you’ve applied for cellphone contract or taken finance for a car, it’s likely your information is in a credit bureaus database.
Sourcing your information from financial organisations you interact with is how they create your profile. So loan providers, collections agencies, and retails stores are some of the places.
These organisations regularly send credit bureaus your account information, such as keeping to agreed terms of paying your bills, current balance and the different type of credit you’ve accumulated.
On the other hand, public reports are also a source for credit bureaus.
Public records include bankruptcy, judgments, liens, lawsuits, and foreclosures and can impact your credit score and are also available on your credit report.
Yes, a lot of information about you is readily available, but things such as income, religion, lifestyle and political preference won’t be added.
Credit bureaus in SA
South Africa has numerous credit bureaus, some more well known than others.
Before we get into the credit bureaus, there’s a significant party you need to know, and that’s the National Credit Regulator.
“The National Credit Regulator (NCR) was established as the regulator under the National Credit Act No. 34 of 2005 (The Act) and is responsible for the regulation of the South African credit industry. It is tasked with carrying out education, research, policy development, registration of industry participants, investigation of complaints, and ensuring the enforcement of the Act.”
The NCR handles the registration of credit providers, credit bureaux and debt counsellors; with the enforcement of compliance with the Act.
Banks use the credit bureaus reports to determine whether or not loaning a consumer is a risk or not.
Who uses credit reports?
The organisations that send information to the bureaus are the ones looking into and buying credit reports and scores.
Like mentioned before, they use them to determine to approve or decline your application for credit. Credit reports and scores have information that determines whether you’ll be able to repay a loan and how much risk is associated with you.
Buying current consumers reports helps creditors set interest rates and limits based on the changes in their monthly reports.
Marketing companies and employers are amongst the organisations that purchase credit reports. But it won’t be a comprehensive report that has account numbers and current balance.
Who do credit bureaus serve?
Credit bureaus serve both parties, the consumers and the organisation.
Consumers don’t need to view credit bureaus and reports as a negative, in fact, it’s the total opposite.
A true reflection on your financial standing is available for you, the bureaus and organisations.
Your report can help you negotiate lower interest rates and payment options. While organisations that buy credit reports are assisted in making well-informed decisions that help mitigate risk.
How to get your credit report from SA’s popular bureaus
Some of South Africa’s well-known bureaus offer you free access to your credit report. Regularly checking your financial footprint may help you understand your spending habits and how to tackle debt.
Here’s how to get your credit report with credit bureaus:
TransUnion, allows for you to get your credit report for free once a year. They also have a monthly and yearly subscription option which will allow access to their platform and your information whenever you want. They also have a USSD channel through which you can purchase your score and is available by dialing *120*8801#.
Compuscan, gives you free access once a year to your credit report or you can purchase a once off report or opt for the 3, 6 or 12 month plans.
Experian, has made it possible for you to have access to your credit score/report whenever you want via ClearScore. You’re also able to pay monthly and a yearly subscription for Experian’s CreditExpert service.
XDS, gives you 30 days free access to your through Credit4Life. The Credit4Life club has a yearly subscription option to get access to your credit report as you wish.
What is in the credit report
- Name & Surname
- Martial Status
- Employment Information
- Contact Number
The information is gathered from the previous times you’ve applied for credit. It is important to keep your information updated so your credit report reflects the correct information so credit providers have the most recent and accurate details.
Also known as the account history, gives insight into your payment behaviour over the past two years, and data from up to five years are available on record.
Under this section you can see when an account was opened, if timely payments on your accounts were made, credit limit and outstanding balances. Home loans, vehicle finance and store clothing accounts are available here.
This is where you will see all the money you’ve received. If you’ve failed to repay any of your debt and went against the terms and conditions of the repayment agreement you may land a a negative listing on your profile such as default, judgement or administration order
According to TransUnion “Defaults – When you default on your credit repayments the credit provider will load a default notice on your credit report. There are two types of defaults: an enforcement default where enforcement action is taken such as bad debt written off or handed over, credit card revoked or repossession of goods takes place; and subjective default which entails the classifications of consumer behaviour resulting from delinquency, slow payments, absconding or not being contactable.”
“A judgment is a court order that is the decision in a lawsuit. If a judgment is entered against you, a debt collector will have stronger tools, like garnishment, to collect the debt. The judge may also award additional fees against you to cover collection costs, interest, and possibly attorney fees.” says Consumer Financial Protection Bureau.
SACPA mentions that “A trace alert is a means to allow the credit provider or debt collectors to draw your attention to the fact that they cannot get hold of you on their current telephone in their database. They will usually supply their contact details with the Trace Alert. Once they place such notice on your profile, the other credit providers will not consider your application for credit in a positive light.”
The credit inquiries section is all the businesses that have requested credit information about you. Every time your credit profile is looked into it’s recorded as an inquiry, there two types of enquiries hard and soft.
Soft enquiry: is when you or a potential employer check your credit profile, this won’t affect your credit score.
Hard enquiry: when a credit provider views your profile to determine whether or not to you qualify for a big loan.
In closing, credit bureaus are organisations that have substantial information on the consumers financial history.
They are obligated by-laws to obtain this information ethically and are also regulated by the NCR.
You can get a copy of your credit report free once every 12 months from various credit bureaus.
Go ahead and see where your financial footing is.