Up to 69% of South African consumers are unaware of their credit profile, according to a recent poll conducted bybond originator leading ooba.
The Credit Bureau Monitor’s 2011 2nd quarter report reported that there has been an increase of credit-active consumers with impaired credit records. The number of consumers with impaired credit records increased by 174 000 to 8.80 million, a 0.3% increase quarter-on-quarter. The percentage of consumers with impaired credit records increased to 46.7%, comprising of 18.5% of consumers in three months or more in arrears, 13.9% of consumers with adverse listings and 14.3% of consumers with judgments and administration orders.
Kay Geldenhuys, Property Finance Processing Manager at ooba says that these results are very concerning as many consumers that have impaired credit records are obviously unaware that they are on this list, or are there as a result of a “minor” violation. “However, the result is often the same as both a negative credit rating and an adverse listing on your name can seriously hinder your ability to secure home loan finance.”
Geldenhuys says that when providing credit to consumers, banks look to ensure that their investment in you is safe. “The riskier the investment, the less likely that banks will approve financing for a home loan. Consumers who are unaware of their credit profile are therefore at risk when applying for home loan finance and may have difficulty securing a mortgage.”
Geldenhuys says that one of the main reasons bond applications are declined is because of the applicants’ credit profile. “It is therefore imperative for potential home owners to be aware of their current credit profiles at all times. To optimise your chance of securing your desired home loan, make sure you keep a clean credit record by ensuring that all of your accounts have been paid to date before you apply for finance.
She says that potential home owners should consider prequalification as an option when shopping around for a home. “This ensures that the applicants’ credit profile and affordability is checked upfront. Buyers also get a clear view of their budget range and can house hunt accordingly.
“Most retail stores and banks’ default listings will remain on a consumer’s credit profile for two years. If you do choose to close an account, settle the account balance and then contact the relevant credit provider to check that your name and record has been cleared. If you have a judgment on record, clear the account and then contact a litigation attorney to have the judgment rescinded.”
She says that if consumers do fall behind on payments they should immediately contact professionals who can offer assistance. “ooba partners with a credit rehabilitation service provider to offer oobaassist, which helps ooba clients solve their credit record problems. Once your credit record has been cleared, ooba will reapply for your home loan, and you will stand a far better chance of getting the finance approved.”
Geldenhuys says in that in order to keep a healthy credit score, consumers should follow the following guidelines:
– Obtain at least two credit reports of your profile on an annual basis.
– Ensure that you meet your monthly debt repayments on time. Even a payment that is only 24 hours late can be bad for your rating.
– Always pay the minimum installment required.