Your credit profile – Separating fact from fiction

What’s a credit profile? You ask. It’s a complete summary of your credit history – yup, everything, all the creditors you’ve been with, your credit cards and accounts, everything. Basically, your credit profile tells a story about you and how well you manage your debt. Even though a credit profile can affect things like job opportunities and the interest rate that banks will give you on car and home loans, it doesn’t have to be a scary thing – as long as you understand how to keep yours healthy.

There’s plenty we believe about credit that’s just wrong.  But don’t worry, Budget did some investigating, and we’ve managed to separate the facts from the fiction. Here’s what you need to know:

• Fiction: It’s expensive to check your credit score and every time you request a report it looks bad on your rating.
  Fact: Under the National Credit Act (NCA), you’re allowed one free credit report each year. You can ask any of the four credit bureaux for your report – ClearScore, Transunion, Experian, Xds and Compuscan.

• Fiction: Anyone can see your credit profile.
  Fact: The information on your credit profile is private. It can only be viewed by companies and individuals for special reasons – and only with your permission. These reasons could be, credibility and affordability assessments, fraud detection and fraud prevention services, assessing an insurance application, getting consumer information to give out unclaimed money (like pension funds and insurance claims), and for checking job applicants for some roles.

• Fiction:  Any potential employer can ask for your credit profile and refuse to give you the job based on your credit history.
  Fact: Any potential employer that wants to do a credit check on you, has to ask your permission first. This type of check is usually only for jobs dealing with cash or finances.

• Fiction: A negative or poor credit profile means you’ll never be able to get credit again and it can never be taken off your record.
  Fact:There are limits on how long some information can stay on your credit profile. For example, if you don’t pay your account and the credit provider sends you a letter of final demand, this will be on your credit report for one year. However, the credit bureau will clear that info if it gets confirmation from your creditor that you’ve paid the full amount before the year has ended.

• Fiction: If a negative rating on your credit profile is wrong, you’re stuck with it, and if you want it changed, you’ll have to pay a lot.
  Fact: If you’re having any issues with credit agreements and non-bank credit providers, like clothing and furniture shops, contact the Credit Bureau to lodge a complaint – they’ll look into sorting it out for you. If they can’t help, you can contact the office of the Credit Ombud to take it further – and for free! They’ll also help with issues with micro-lenders, fraudulent listings, debt collection orders, and any complaints about your credit bureaux listings. You can contact the Credit Ombud on these details:

   

  Tel: 0861 66 28 37

  Website: www.creditombud.org.za
  

  Email: [email protected]

  Sms 44786 for a call back.

• Fiction: All credit is bad and the best way to have a good credit rating is to have no credit at all. Fact: Someone who avoids credit completely can be seen in the same light as a person who can’t handle their credit well. Credit providers want to know that you can manage your credit. When you take out any credit agreement, make sure you read the fine print carefully and only take out as much as you can pay back.

• Fiction: Telling your creditors that your finances aren’t good will automatically result in a bad credit profile. Fact: Your creditors want you to pay them back, and when you say you will. If you’re having money problems, and you contact them straight away, they can help you by negotiating a new payment plan based on what you can afford. This is the better option to skipping payments, which will just look bad on your profile.

Your credit profile is a record of your history when it comes to debt. If you make sure you know all the facts around managing it – and you keep it healthy – it’ll be a good friend to have on the road to financial fitness.