With the cost of cybercrime worldwide expected to hit $2 trillion by 2019, according to Juniper Research, MultiNET Home Loans, one of South Africa’s top three mortgage originators, is warning consumers to tighten control on their credit scores.
Don't become a victim of identity theft
According to Shaun Rademeyer, who took over as CEO of MultiNET earlier this year, credit score fraud is directly linked to identity theft. And identity theft is at the core of South Africa’s “alarmingly high” level of cyber fraud.
PwC South Africa’s 2018 Global Economic Crime and Fraud Survey puts the country’s reported economic crime rate at 77%, which is significantly higher than the world average of 49%. Add unreported or undetected incidents to the mix, which the World Economic Forum (WEF) believes accounts for a “significant portion of cybercrime, and the number is likely to rocket, says Rademeyer.
“Every single person with a bank account, online identity or credit rating is at serious risk of becoming a victim of cybercrime,” warns Rademeyer, pointing out that less than 3 percent of consumers check their credit scores at all, let alone regularly. “And if you have any credit accounts, you will have a credit score. Essentially a record of how you manage your finances, your credit score can be accessed by companies such as TransUnion, Compuscan and Experian.”
Bearing this out is the latest “Economic Impact of Cybercrime” report by the US-based Center for Strategic and International Studies (CSIS) and McAfee, which says: “Where cybercrime is the undisputed leader… is in its ability to make hundreds of millions of people victims. A good estimate is that two-thirds of the people online - more than two billion individuals - have had their personal information stolen or compromised.”
According to TransUnion, South Africa's largest credit bureau, identity theft is one of the fastest growing crimes in the world. “Experts believe that someone's identity is stolen somewhere in the world every two seconds, yet most people believe it cannot happen to them until it is too late and their credit worthiness has been destroyed. And because identity theft is a ‘silent’ crime, it can go undetected for months, even years while victims have enormous debts run up in their name. Many cases of identity theft come to light only when the victim starts receiving accounts and letters of demand for debts they know nothing about, or when their own application for credit is refused because their credit record is in tatters.”
Criminals are increasingly stealing people’s personal details to get access to credit scores, says Rademeyer. “Using the stolen identities, they then spend as liberally as possible without attracting attention or making any payments, knowing that time is on their side. Very often, victims, only find out that they’ve been hacked when they apply for a home loan and are declined as a result of their terrible credit score. By then, the criminal has long disappeared, leaving in his wake a substantial amount of credit card debt for the victim’s account.”
Why you need a good credit score
Simply put, says Rademeyer, a credit score is a combined report that divides your financial activity into weighted categories including payment history, credit utilisation, credit history, recently reported balances and new credit accounts. Credit scores are used by lenders such as banks and landlords to assess risk prior to granting loans or leases based on how well the consumer manages his money.
Says Frank Lenisa of Compuscan: “Statistics show that high, and very high-risk borrowers, together make up more than half of all credit-active consumers in South Africa. While this is alarming, what is equally concerning is that many of these consumers may not even know what a credit score is, what their own credit score is or how a poor score negatively impacts their ability to obtain credit.”
He adds: “A high score indicates that a consumer is a low risk borrower, and vice versa. It is important to maintain a good score as credit providers consider this information when deciding whether they will extend credit to you. A good credit score is paramount when purchasing a home, financing a vehicle or obtaining any other loan – your chance to obtain credit could therefore be hampered by a poor credit score.”
A good credit score in South Africa is
anywhere from 700 to 850 points
A good credit score in South Africa is anywhere from 700 to 850 points, says Rademeyer, adding that unserviced debt and negative findings by prospective lenders will obviously shred points.
How to check your credit score
By checking credit scores vigilantly – and Rademeyer recommends at least once a month – consumers will be able to identify unexplained purchases and credit cards. “Your credit score is key to monitoring for identity fraud,” he emphasises. “By monitoring it closely, you’ll be able to pick up errors and potential fraud that could cost you your loan or hit you with exorbitant interest rates.”
The importance of a good credit score ahead of a big ticket purchase is very important, he says, but he cautions employing an “ethical hacker,” a practice increasingly utilised by consumers desperate to improve their scores. “Not only is this fraudulent in its own right, but giving personal information to a stranger makes the consumer vulnerable to having his identity compromised at a later stage,” warns Rademeyer. “The only hacker that you should employ is yourself in the course of checking your own score.”
Further, he recommends that consumers make use of the provision in South Africa’s National Credit Act, which allows citizens one free credit report every year from TransUnion, Compuscan and Experian, among other credit bureaux.
A credit card fraud alert, available from major credit companies, is also a good idea he avers, since it will prevent criminals from opening accounts in your name.
Another key element of improving your credit score is to pay off debt wherever possible and as a priority before buying anything new. “Work out a repayment plan with your creditors or bank if you’re battling to service your debt,” he suggests.
MultiNET, a completely independent 18 year veteran of the mortgage industry, has contracts with all major South African banks and is the only originator with a direct contract with SA Home Loans, providing a key source of bond procurement to consultants, aggregators, estate agents and consumers.
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