Worried about your credit record?

    19 March 2015 at 08:37 by Wendy Knowler - Consumerwatch's Wendy Knowler has some good news for those who've been blacklisted on a credit bureau.

     

    If you were. “blacklisted” on a credit bureau, even if you paid the debt, that listing stayed on your profile for a set amount of time - two years for an arrears payment, for example.

    But last Friday, March 13, was a lucky day for consumers. That’s because Trade and Industry Minister Rob Davies signed the National Credit Amendment Act into law, and now, if you pay the debt in full, the “blacklisting” must be removed from your credit record on all the credit bureaux, pretty much immediately.

    The same goes for all adverse listings, including “slow paying”, “absconded”, “handed over for collection”, “legal action” or “write off”. As soon as you pay in full, the listing will disappear from your record. It’s a huge move.

    The retention period - how long that “blacklisting” must stay on your record, if you don’t pay - has been reduced by the amendment, too.

    In the past, “enforcement action” listings such as “handed over for collection” or “legal action” had to stay on your record for two years, but now that has been reduced to just ONE YEAR. And, again, if you pay the debt, it must disappear immediately.

    Listings about consumer behaviour - “delinquent”, “slow paying” and the like - remain on your record for a year unless you pay the debt, and judgment debts for five years - that’s if you don’t pay.

    A word of warning: while your adverse listings will disappear from your credit record as soon as you pay the debt, the payment profile section at the bottom of your record will reveal your recent payment behaviour, so if you are in arrears with a clothing account, for example, a credit provider will be able to see that, and may regard you as too high risk for more credit anyway.

    But in the case of one-off debts such as a medical bill, or a school fees debt, having the adverse listing disappear from a consumer’s record is a huge advantage, because it won’t appear in the payment profile, so there is no trace of it.

    Another biggie of the National Credit Amendment Act relates to the prescription of debt.

    Most debts prescribe after three years if there’s been no payment of the debt, no acknowledgement of it and no summons. That means the consumer doesn’t have to pay it. But for decades it has been perfectly legal for companies to contact consumers and demand payment of a prescribed debt, and those that didn’t know about prescription and promised to pay, or started paying, cancelled their defence of prescription and they became responsible for paying the full debt.

    That changed last Friday. It’s now illegal for companies to collect prescribed debt. It’s effectively wiped out a major industry built on collecting old, written off debt and it’s going to save a lot of people a lot of misery.So if you get a call or an SMS from a company harassing you to pay a prescribed debt - and you know for sure that it’s prescribed - tell them they are breaking the law and not to contact you again.

    Reckless lending provisions have been tightened a lot, so credit providers are going to have to delve into your income and expenses a lot more carefully before granting credit. A lot more credit application rejections are expected.

    Finally, in the past many employers and employment agencies bullied job applicants into giving them permission to check their credit records, now, thanks to the amendment, they can only do that if the job in question involves the handling of cash or finance.

    So there you have it. The amendments change the credit landscape quite a bit.

    And the Minister’s signing came as quite a surprise to the industry, especially as he made the changes effectively immediately - there’s no grace period at all.

    *The credit amnesty of last April saw all adverse listings and paid judgments removed from consumers’ credit records so all credit bureaux only have 11 months worth of adverse listings on their databases.

    You are legally entitled to one free credit report a year from each credit bureau.

    Contact details of three major credit bureaus:

    TransUnion: www.mytransunion.co.za, 0861 886 466

    Experian: www.experian.co.za, 0861 105 665

    XDS: www.xds.co.za  (011) 645 9100

    If you disagree with a listing, lodge a dispute with the credit bureau. If, after 20 days, the adverse listing remains, you may approach the credit ombudsman for help, by calling 0861 662 837 or e-mailing Ombud@creditombud.org.za

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