The credit information amnesty which is set to kick in on the 1st of April 2014 is not a get-out-of-jail-free card where outstanding debt is concerned.
This is expressed by Kevin Hurwitz, Chief Executive Officer at Wonga.com SA in a reaction to last week’s publication of credit information amnesty regulations.
The regulations passed by the minister of trade and industry Rob Davies will mean that lenders will not be able to rely solely on classifications contained within the payment profile of a consumers’ credit record when making accurate credit decisions.
Hurwitz said what is important in terms of this amnesty is that consumers understand that they are still required to pay off any existing debt that they hold. “Many consumers erroneously believe that this is a get-out-of-jail-free card and that the debt itself will disappear”.
He adds, “This process and how it will work is not simple, and it won’t be easy for consumers to understand exactly what information will be removed from their credit record, and what will stay.”
Hurwitz says that in terms of Wonga’s own system, where prior to this amnesty, applicants with adverse listings would be declined straight away. Following the introduction of the amnesty, however, they will proceed through the company’s own automated risk engine. “We are confident that we will be able to identify those customers who are credit worthy and those that are not because we constantly update and evolve the data we consider when making a decision.”
“At Wonga.com, we access several thousands of pieces of publicly available data to make an accurate credit decision. We always believe it is better to access as much data as possible, rather than to just rely on one source, such as the credit bureau,” says Hurwitz. “In fact, we are obsessed with data and we are always looking for new sources of accurate and reliable information that we can use to improve our risk decision-making. So, if nothing else, these Regulations will further motivate our search for good quality data.”
Hurwitz added that as credit is vital to the growth of any economy, the credit providers now have a greater responsibility to ensure more thorough checks are in place before credit is granted in order to ensure that not only consumers, but the economy itself does not suffer.”