Many of South Africa's consumers with bad credit records are unable to secure home loan finance to enable them to buy property, according to ooba.
ooba has revealed that three quarters of South African consumers are unaware of their credit profile and 69 percent of respondents do not know their credit status.
The bond originator has revealed that three quarters of South African consumers are unaware of their credit profile and 69 percent of respondents do not know their credit status.
The Credit Bureau Monitor Q2 2011 reported that there has been an increase of credit-active consumers with impaired credit records.
It said the number of consumers with impaired credit records increased by 174 000 to 8.80 million, a 0.3 percent increase quarter-on-quarter.
The percentage of consumers with impaired credit records increased to 46.7 percent, comprising of 18.5 percent of consumers in three months or more in arrears, 13.9 percent of consumers with adverse listings and 14.3 percent of consumers with judgements 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.
“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 explains 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,” she says.
One of the main reasons bond applications are declined is because of the applicant's credit profile.
It is therefore important for potential home owners to be aware of their current credit profiles at all times, she says.
She advises that in order to optimise chances of securing a home loan, would-be homebuyers should keep a clean credit record by maintaining regular monthly payments.
Would-be home owners should also 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.
She says most retail stores and banks’ default listings will remain on a consumer’s credit profile for two years.
One of the main reasons bond applications are declined is because of the applicants’ credit profile. It is therefore important for potential home owners to be aware of their current credit profiles at all times, she says.
If one chooses to close their account, it is essential to settle that 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.
Geldenhuys says in that in order to keep a healthy credit score, consumers should follow the following guidelines:
- activate a profile with the TransUnion ITC or Experian as this will help with checking one’s record 24/7
- obtain at least two credit reports of your profile on an annual basis
- ensure that you meet your monthly debt repayments on time. A payment that is 24 hours late can be bad for your rating
- always pay the minimum installment required – Denise Mhlanga
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I was reading this article and boy will I not check my credit rating ever again with Transition. Last year I did this and in January Edgars contacts me and asks me if I made any purchases in Johannesburg. I live in Cape Town. My Edgars card was maxed out at three different shops. My card was still in my possession. After a lengthy process filling in forms, affidavits and embarrassing questions being asked I managed to sort the ordeal out. Coincidence that this happen just a week later after I checked my credit rating with Transition. - Bryan
I had exactly the same experience as Bryan a couple of years ago and Edgars were also involved – although I didn’t even have an Edgars account (and never have had)! Took me no end of screaming phone calls between Edgars and TransUnion to get the thing cleared. Too much of a co-incidence I think! - Linda
Yes we have checked my husband’s record just to find a judgement against his name from the city of Tshwane. Problem is this is an account for rates and taxes that is not for our account as this property was sold in 2003 and the account is for money outstanding in 2005. We phoned city of Tshwane as well as the attorney’s in this matter. Both of them said that this is none of their responsibility to sort out. Now we have to go and see a litigation attorney to sort this out on our cost. What a waste of money and time to try and clear our name, what a waste to see so many incompetent people who can ruin your credit record in a second !!!!! - Susan