A credit bureau will calculate your credit score when a credit report is called for, as an overall, up-to-date indicator of your credit standing at a particular time.
- Credit bureaux are constantly checking how you handle credit by obtain information from credit providers.
- If the information on your credit report is inaccurate you can dispute it.
- Bureaux can also provide your credit report to employers when you apply for a position.
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Who is checking how you handle credit? All the credit bureaux.
A credit bureau is a commercial company that gathers information about the credit history and financial status of individuals and businesses and sells that information, as your credit report, to credit providers and others who have an interest in the information.
Are the credit bureaux regulated?While the bureaux are commercial entities and may be regarded as a threat by some consumers, they are in fact an important part of the framework created by the National Credit Act (NCA) to manage credit.The Act requires credit providers to ensure that consumers can afford the credit they apply for and understand the commitment they are making, to protect them from taking on more debt than they can manage.Credit bureaux must be registered with the National Credit Regulator (NCR), which enforces the NCA, and you can complain to the Credit Ombud if you have unresolved disputes about credit information listed with the bureaux. The ombud has oversight over credit providers and bureaux that are members.
How do credit bureaux work?The bureaux gather, research and supply information that credit providers need to make the informed decisions the NCA requires. They partner with the companies who use their services, and they in turn provide the bureaux with month-by-month updates on active credit agreements and the repayments made by those using credit.Major lenders and credit providers, such as banks, retailers and mobile phone companies, are big users of credit bureaux’ services. These services are also used by estate agents who sell and rent properties, and employers who need to verify the financial status and background of prospective employees whose roles require absolute financial integrity.
Where do credit scores come from?A credit bureau will calculate your credit score when a credit report is called for, as an overall, up-to-date indicator of your credit standing at a particular time. Credit bureaux have their own methods of calculating scores, so there is no single score for any consumer.
Who makes the credit decisions?The bureaux do not make decisions for the lenders/credit providers; they simply supply the answers to questions such as how regularly you pay your debts, whether you stretch your credit facilities to the limit, and whether you have been refused credit recently.
Can anyone see your credit report?The information in your credit report is personal and powerful. For this reason, the NCA requires bureaux to keep records confidential and use the information only for the purposes outlined in the NCA:• To assess whether or not you can afford credit or other services, and whether you manage credit responsibly;
• To investigate fraud, corruption or theft;
• To consider your application for employment in a position that requires trust and honesty and entails the handling of cash or finances.
If information is released without permission, you can take a complaint to the Credit Ombud.As a consumer, you have the right to access your own reports free of charge once a year, but if you want to monitor your credit record more carefully, you can become a paying client of a bureau by signing up for regular report updates.If you find inaccuracies in a report, you are entitled to have them corrected by the bureau concerned, with the help of the Credit Ombud if necessary. You are also entitled to be given 20 days’ notice when a credit bureau plans to classify you negatively (using terms such as “slow to pay”, “default”, “absconded” or “delinquent”), or refer to enforcement action (being handed over for collection or legal action) being taken, so that you can challenge information.
How can I challenge incorrect reporting?Every registered credit bureau is obliged to make your report available free of charge once a year and the NCR encourages consumers to check the information they carry regularly.If you believe something in your report is incorrect:
• Contact the credit bureau it came from and request a complaint form (maximum fee: R20).
This article was first published on SmartAboutMoney.co.za, an initiative by the Association for Savings and Investment South Africa (ASISA).