In South Africa, we have 4 major credit bureaus who record credit and personal information on consumers, namely Transunion ITC, Experian, XDS and Compuscan. 

Different credit providers use different credit bureaus, and sometimes a default or judgment will reflect on one credit bureau, but not on another.It is therefore very important to obtain the data from al 4 bureaus, in order to accurately compare and assess your credit record. 

The National Credit Act empowers the consumer to check his/her own credit record, especially before applying for credit, or employment. It is also important to carry out regular credit checks, in order to ensure that no fraudulent activities are carried out in your name.

Credit Clinic assists relations with the 4 major credit bureaus makes it very easy to obtain a one stop 4-in-one easy understandable credit report, saving you valuable time in the process. Furthermore, our professional consultants will give you a summary breakdown of the reports in easy format, as many consumers do not understand the score cards, or the different listings.

Your Credit Bureau score is designed to show you, by way of a number, the strengths and weaknesses of the information in your credit report. It shows you how your credit standing compares with other consumers.

The information in your credit report is used by most credit and service providers as an important contribution to the development of their own credit risk score. This, along with your employment history; your income and affordability assessments as well as the type of credit for which you are applying, may affect the outcome of your credit application.

Your Credit Bureau score is calculated using a formula that evaluates how well or badly you pay your bills, how much debt you carry and how all of that stacks up against other borrowers. In effect, it tells you in a single number what your credit report says about your management of existing credit.

Generally, the higher your score, the better. All the credit information in your credit report contributes towards the calculation of your credit score.

So if you want to apply for credit to buy a home or car, for example, or to apply for an increase in your credit limit, your credit score can serve as a guide. A poor, unfavourable or below average score indicates that you have some work to do to improve your credit risk rating.

It could also indicate that there could be a problem with the information contained in your credit report. It could alert you to the fact that you need to investigate and possibly challenge some of the information contained in your credit report – before you apply for that all important loan.

Voluntary sequestration is the voluntary surrendering of your estate (financial affairs) to the Master of the High Court under the governance of the Insolvency Act 24 of 1936.

It is an application brought in the High Court of South African, by an attorney in cooperation with an advocate on behalf of the debtor which ultimately allows the debtor (the applicant) to have up to 80% of his debt written off, as a final resort to escape insurmountable debt accrued through circumstance beyond his/her control.

Sequestration is thus the process by which a debtor who has become insolvent (someone who’s financial liabilities exceeds that of his/her income) can obtain the legal status of Insolvent in order to enjoy the benefits of the status.

The debtor is relieved from further obligation to pay his/her creditors as stipulated by the original creditor’s agreement, and the creditor’s agreement and claims are brought to a close once they have received their benefit from the insolvent estate.

A default occurs if the lender decides to close your account because you’ve missed payments. This might happen to an account you have with a bank or mobile phone company.

A default can occur regardless of how much money you owe, whether it’s a few Rands or a few thousand Rands. It usually happens if you’ve been missing payments over the course of three to six months, but this can vary depending on the lender’s terms. So, it’s important to keep track of when you are due to be charged and set money aside for it.

A default will stay on your credit file for six years from the date of default, regardless of whether you pay off the debt. But the good news is that once your default is removed, the lender won’t be able to re-register it, even if you still owe them money. Nevertheless, you should continue to meet any remaining payments as the lender could go on to register a CCJ against you.

Note that the lender may sell your debt to a debt collector (a company that specialises in getting debts repaid). However, the lender must make this obvious on your credit report, so it won’t look like you have two defaults. Also, the amount and date shouldn’t change, so you won’t need to pay more or wait longer for your default to be removed.

If you have a judgement against you, this means that a court has instructed you to pay an outstanding amount owed to one of your credit providers. It is a very important category when it comes to your payment history and if you have a judgement against you, this will seriously affect your credit score. It can remain on your credit report for five years and this will negatively impact your ability to get any other credit in the future.

A judgment is granted by the court when legal summons is issued and you fail to defend the summons or make payment of the amount claimed. 

Although not always the case, in general a consumer is listed as defaulting before a credit provider applies for a judgment. Credit providers tend to apply for a judgments when a consumer has fallen behind on their payments and has failed to respond to reminder letters. Or they have not stuck to a payment arrangement. If you receive a summons and don’t take any action to defend the summons, or contact the credit provider to make an arrangement, a judgment can be taken in your absence

Remember that once a judgement has been filed, it will start to build interest. If you have a judgement against you, the creditor will attempt to collect the payment from you. The longer you postpone this payment, the higher the amount becomes that needs to be collected from you, because of the interest.

Debt Review s the process whereby a debt counsellor assesses a client’s outstanding debt and implements a restructured debt repayment plan. This will be done through the process of renegotiating interest rates with credit providers in order to reduce them, as well as by extending the debt repayment terms.

A new affordable monthly budget and payment plan will be drawn up by a debt counsellor, which will provide the client with the correct guidelines and means to live off.

In addition to this, the debt review process entails that the client makes only one monthly debt repayment to a payment distribution agency, which will then pay all the clients credit providers. This reduces the stress of having to keep up to date and on top of multiple debt repayments.

Most importantly, when under debt review, clients are legally protected by the National Credit Act (NCA) and creditors are no longer allowed to hassle them.