Credit Clearance FAQ

The duration of adverse information that is kept on your credit report depends on the type of information which was listed. Below is a brief list of adverse information and how long these listings will remain on your credit report. 

• Judgments - 5 Years
• Defaults - 2 Years
• Sequestration. Sequestration orders will stay on your credit report for five years or until a court is approached to rescind the administration order.
• Administration order. This will stay on your credit report for five years if you have applied for administration or until a court rescinds the administration order.
• Debt Counselling and Debt Review. Debt Counselling indicators remain on your credit report until a debt counsellor issues a clearance certificate or a court declares the consumer no longer over-indebted
• Credit Enquiries. Whenever a consumer applies for credit facilities the credit provider will do credit checks to investigate the credit record of the consumer. This enquiry will be registered and will remain on your report for a period of one year. A huge amount of credit inquiries in quick succession is not a good sight as it could suggest that you are in trouble and looking for finance to get out of debt. 

Arrears on your account implies if you have failed to pay an account or accounts for a month or two and you have now fallen behind. At this stage, the credit providers have not as yet taken legal action. The credit bureau will have this adverse information and they will report that the accounts you have fallen behind on are overdue. This adverse information will have devastating effects on your credit score.

It would be in your best interests to contact us as soon as possible for us to assist you with a suitable solution before legal action is taken against you.

A default listing is an adverse listing which got listed on the credit bureau to show that you have defaulted on a credit agreement. The account is now written off. This default account is now handled by attorneys and collection firms and if payment is not received to settle the outstanding amount due further legal action is to follow.

To avoid further legal action, you still have time to make payment arrangements to get the outstanding debt repaid. The debt collector will receive instructions from the credit provider to collect the full outstanding amount due immediately. Most credit providers understand circumstances happen and will accept a realistic repayment arrangement. Please bear in mind that credit providers are not obligated to accept any payment arrangements. In the case where you have defaulted on a vehicle finance account, the financier will repossess the vehicle without entering into repayment arrangements.

Contact us immediately should you have defaulted on a vehicle and home loan finance account. We will safeguard these assets from repossession.

A judgment is a listing on your credit report if your credit provider were forced to approach a court to get payment from you for an outstanding debt.

Judgment listings have huge negative implications for your credit bureau score These listings must be attended to as soon as possible to avoid further damage to your credit bureau score.

Judgment listings will remain on your credit report profile for 5 years if not settled.

In South Africa, credit providers rely on credit scores when making decisions when approving or declining credit applications. Credit scoring consists of a statistical analysis of the creditworthiness of a consumer. Credit scoring is the first step for credit providers to decide whether to proceed to assess your credit application.

The credit score matrix varies from a credit bureau to credit bureau and these score numbers range between 300 and 850. There are 7 categories which usually make up your credit score:

• Repayment history
• Type of accounts
• How many new accounts
• Age of accounts
• Outstanding Balances
• Adverse accounts (judgments, defaults, trace alerts and notices)
• Amount of credit inquiries

Please note that a credit score only ranks a consumers credit risk, and having a good credit score does not mean you will qualify for credit. Credit providers will still do affordability assessments as set out in the National Credit Act.

A typical Credit Score Card:
• Excellent: 767+
• Good: 681 – 766
• Favourable: 614 – 680
• Average: 583 - 613
• Below Average: 527 – 582
• Unfavourable: 487 – 526
• Poor: 0 – 486

Credit Scorecard source https://www.transunion.co.za

No! The credit bureau does not decide the outcome of any credit application. The credit bureau supplies information about the creditworthiness of consumers and businesses.

A credit bureau is a private data collecting company which collects consumers and business account information from banks, credit providers and service providers. A credit bureau is register under section 43 of the Credit Act and reports accurate credit information. It makes this information available to banks, credit providers and leasing companies.

A credit provider will make an informed decision to approve or decline credit applications based on the credit information supplied.

Prescription is a complex piece of law and we will simplify it here. Prescribed debt is if a debt is extinguished after a while.  Example – there is no obligation to repay the debt after a certain period.

Your debt is deemed as prescribed under the Prescription Act 68 of 1969 if you have made no payment towards an account and have not acknowledged in any way that the money is owing or have agreed verbally or in writing to pay the debt in the foreseeable future. Most debts carry a prescription period of 3 years. A credit provider may not collect on these debts if all the above criteria are met

Examples of debt that carries a prescription period of 3 years

• Personal Loans
• Credit cards
• Overdrafts
• Revolving loan accounts
• Payday loans

Examples of Debt that carries a prescription period of 30 years

• Home loans
• Judgement listings (where a court granted judgment for unpaid debt)
• Government debt (taxes, traffic fines and TV licenses)

What is a Credit Bureau?

• Credit bureaus collect and maintain consumer credit information. 
• Credit bureaus report to the National Credit regulator NCR.  
• Collected consumer credit information is available to credit providers for a low fee on how consumers are managing their finances. 
• Credit providers use credit information to make informed decisions about new credit applications. Credit bureaus assign credit scores to a consumer’s profile. 
• A credit score is a numerical score to predict the credit risk of consumers. 
• 4 major Credit Bureaus in South Africa, Transunion, Experian, XDS, and Compuscan

A Credit report is a record containing your credit history and financial transacting data. It demonstrates how you have managed your credit obligations in the past under the credit bureau retention periods. Your credit report will show the following information:

• Addresses
• Employers history
• Adverse listings which include judgments, defaults, notices and trace alerts.
• Payment profile of all past and current accounts and how you paid these.
• Credit enquiries made on your credit profile.
• Credit Score. In certain circumstances, Credit bureaus will offer this score for a small fee

Credit Clearance and ITC Clearance is a process where a consumer or a third party liaise with the credit bureau to remove paid adverse listings and remove paid in full judgments. The process of credit clearance improves credit scores.

Sequestration is a legal process in South Africa where an application is done by a sequestration advocate to the High Court to apply for the applicant to surrender their estate. The surrender of one’s estate is to pay creditors for debts if one's liabilities are more than one's assets. The application will be with the master of the high court and you will be declared Insolvent under the Insolvency ACT 24 of 1936

Once the granted order is official the master will appoint a trustee to control the estate and distribute the assets according to the Insolvency ACT 24 of 1936. The proceeds get paid over to credit providers in a ratio of 20cents in each rand after all administrative costs got paid.

Once an order for Sequestration is successful all assets in your estate gets auctioned off to ensure your credit providers receive a 20cents in each rand.

Benefits of Sequestration:

• Legal action will stop
• Interest costs will stop

Disadvantages of Sequestration:

• You will lose all your assets including vehicles, property and furnisher
• You will get listed on the credit bureau and you will not have access to credit until rehabilitated. 10 years in most cases
• You won’t be able to act as a director in a public company or as a member of a close corporation.
• If you're employed in the financial sector you will find it difficult to find new employment and if currently employed your current position may be at risk if employers conduct credit checks on annual intervals.

Items and assets excluded from the sequestration process

• Tools of your trade. Example if you’re an electrician all the tools you need to use to make a living.
• Vehicles still under a finance agreement and not paid off
• All children Assets

Disclaimer: All information provided on this website and this page does not constitute and does not serve as legal advice and is only for general information purposes. For more information on Sequestration please consult your attorney.

A removal of a credit judgement www.creditsalvage.co.za can be a tricky and sometimes complicated affair. It is important to get all your ducks in a row, so to speak when dealing with the removal of a credit judgement. You are entitled to apply for rescission or removal of a credit judgement if you can prove that when the judgement was granted against you, you were not intentionally in contempt of court or absent from the court.  You will also need a legitimate defence against the action instituted against you. You are entitled to apply for rescission or removal of a credit judgement if you have paid the plaintiff in full and the plaintiff consents to the removal. You and the plaintiff can agree to abandon the credit judgement. Notice of the abandonment may be filed in the court record, but this will not have the effect of deleting the judgement from the Credit bureaus databases. Credit Judgements are deleted from Experian, Transunion, XDS and Compuscan record automatically after the lapse of five years.

If you follow all the steps correctly the procedure of a rescission of judgement www.creditsalvage.co.za  is quite easy to understand. You would only be entitled to apply for the rescission of a judgment that was granted against you if the other side consents thereto in writing or, that failing if you can show that at the time that the judgment was entered, you were not in wilful default and that you had a valid and bona fide defense to the action instituted against you. You get consent for the rescission of judgements.

If you get such consent it is a relatively simple matter to have the judgment set aside. In most courts, you have to bring a substantive application to obtain the rescission. In that case, you will have to use an attorney who will charge you about R1500 plus VAT for his services. In other courts, all you have to do is get a rescission of judgements from the clerk of the court, take it to the creditor to sign, and then take it back to the court. They will then rescind the judgment on your behalf at no cost to you. You don't get consent for the rescission of judgements.

You can successfully apply to the court for a rescission of the judgment only if you can show that at the time that the Judgment was entered, you were not in wilful default and that you had a valid and bona fide defense to the action instituted against you.

Experian makes use of the Delphi credit score (www.creditsalvage.co.za) that ranks your credit rating. The Delphi score will only appear on an Experian credit report. The Delphi score is calculated by a computer program that takes all your credit profile information and converts it to a simple three-digit number or "score". The Delphi score number will range between 0 and 750. Based on Experian Credit-bureau data, the higher the number the more likely you are to meet your credit commitments in the future.

An Empirica Score (www.creditsalvage.co.za) is a credit score. A credit score is a summary of a number of positive and negative factors on your credit report that aims to predict how likely you are to honor your credit commitments in the future. An Empirica Score is a rating that is often used by lenders to identify the risk in offering you credit. Fair Isaac & Co developed a credit measurement tool in the 1950s called the FICO  score. This score has become the basis for most other credit scores and the Empirica  Score used by TransUnion is largely based on it. Not all credit scores are the same. There is no single credit score. TransUnion provides an Empirica credit score on request.