Five myths about your credit report

Sharon Coppola, Senior Executive Risk and Compliance at Experian South Africa, unpacks the myths and truths behind credit reports and credit scores.

experian-south-africaAs more South Africans seek ways to manage their personal finances during the current economic times, it has become equally important to take heed of their credit report as the starting point.

Regularly checking your credit report – and credit score – is vital for ensuring good credit health.

Your credit report provides you with a good indication of your financial wellbeing, and enables you to gauge areas that need to be improved upon, while giving assurance that all credit information is accurate. All of these are imperative for ensuring a sound credit reputation. Furthermore, regular checks protect you against the possibility of identity fraud.

Experian South Africa wants to to build awareness locally about the importance of understanding your own credit profile as well as to encourage consumers across the nation to think about how they can make positive changes in how they manage credit. So here are some myths and truths behind credit scores and credit reports:

Myth #1: Credit reports can only be accessed by credit providers

Fact: Anyone can access their own credit report ‒ and for free once a year. Your credit report gives you the power to manage, protect and improve your personal credit information. It also shows information that a lender will see when an application for credit is made. Checking your credit report is a sign of responsible credit management for managing a healthy credit standing. Contact Experian’s consumer helpdesk on 0861 10 56 65 to obtain your free credit report.

Myth #2: You cannot challenge information reflected on your credit report

Fact: The National Credit Act has made provision for consumers to challenge the accuracy of information contained in their credit report. Once your identity has been successfully verified, the dispute process will ensue, with the credit bureau requiring the source of the information to verify the accuracy. Credit bureaus have 20 business days to investigate and resolve information that has been challenged. In order to log a dispute with Experian, contact our consumer helpdesk on 0861 10 56 65 or email consumer@experian.co.za. If you are not satisfied with the outcome of the information that you have challenged, the Credit Ombud may then be contacted on 0861 662 837 or email ombud@creditombud.org.za.

Myth #3: Credit bureaus decide whether to give you credit or not

Fact: Credit bureaus record consumers’ repayment behavioral trends to determine their creditworthiness – they do not decide who gets credit and who doesn’t. Credit bureaus provide factual information received from multiple sources that are used by credit lenders in their scoring and assessment processes.  The decision to grant credit is made by the lender.  A credit score provides lenders with an indication of an individual’s ability to repay debt and is a measure of both their willingness and capacity to do that. It usually includes your payment history, current level of debt, types of credit accounts used, length of credit history and number of credit enquiries performed over a period of time. It is advisable to keep track of your credit report, check for any inaccuracies and ensure that the information on your credit report is up-to-date.

Myth #4: Credit bureaus can ‛blacklist’ me

Fact: Credit bureaus do not ‛blacklist’ – instead they are responsible for acting as a ‛library’, receiving, collating and maintaining information and data concerning consumers and issuing credit reports. They provide information about your credit history and do not offer opinions or comments about whether you are likely to afford credit applied for or repay credit agreements that you have entered into. Lenders make their own decisions using all the information they have available to them. The information stored by Experian Credit Bureau is a combination of both positive and negative information – in fact, about 85% of information held by Experian is positive and will help individuals to get credit. A good credit report can in fact give you better access to credit.

Myth #5: Someone can fix your bad credit report for you

Fact: There is nothing that a ‛credit repair’ company can do for you that you can’t do yourself. No one can remove accurate information from your credit report. Reputable debt counselling services can help you come up with a plan to repay your debts, but the only legitimate way to enhance your credit score is to practice good credit management.

Improving financial literacy

Experian is committed to improving consumer financial literacy and is dedicated to helping consumers understand what a credit score means and how to manage your overall credit health.

We encourage consumers to take advantage of the free service provided by our credit bureau as prescribed by the National Credit Act, giving consumers the right to access their credit reports once a year at no cost.

The more insight and understanding people have about credit, the easier it is to build and strengthen their overall financial well-being.

For more information, visit Experian’s website or watch the documentary Inside Experian.