Credit Clearance and debt review clearance FAQ - frequently asked Questions

How long will I be blacklisted on the Credit Bureau?

The duration of adverse information that gets recorded on your credit report depends on the type of adverse. 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 rescinds the administration order.
                      • Administration order. Administration orders will stay on your credit report for five years. 
• Debt Counselling and Debt Review. These 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 Inquiries. Whenever a consumer applies for credit facilities the credit provider will do credit checks to investigate the credit record of the consumer. This inquiry will get registered and will remain on your report for one year. A huge amount of credit inquiries in quick succession is not a good sight. Many inquiries suggest that you are in trouble and looking for finance to get out of debt. 

Why do I get declined for credit every time I apply?

A credit provider will decline a new credit application if any of the following is present in your application:

• You are currently under debt review.
• You recently finished the debt review process. Certain credit providers will decline an application if you have recently exited a debt review process. Allow at least a month or two to apply for credit after you have completed the debt review process. 
• You have completed the debt review process but have not managed to remove the debt review indicator. 
• You have completed the debt review process and the debt review indicator was deleted. If a credit application failed it could be that credit providers did not remove their internal debt review indicator from your profile. Forward your clearance certificate to these credit providers and instruct them to remove the indicator. 
• You have no credit history. 
• You are blacklisted. Blacklisting refers to a credit profile with an adverse listing. These listings include Judgments, defaults, trace alerts and administration orders. 
• Low Credit Scores
• Affordability calculations failed. According to the credit providers affordability assessments, you will not be able to repay the monthly instalment.
• Many credit applications or enquiries in the past month.
• Having many payday/ microloans on your credit profile.
• Credit providers may decline a credit application if they feel you will not be able to repay the debt. 

Right to apply for credit

60. (1) Every adult natural person, and every juristic person or association of persons, has a right to apply to a credit provider for credit.

(2) Subject to sections 61 and 66, a credit provider has a right to refuse to enter into a credit agreement with any prospective consumer on reasonable commercial grounds that are consistent with its customary risk management and underwriting practices.

(3) Subject to sections 61 and 92(3), nothing in this Act establishes the right of any person to require a credit provider to enter into a credit agreement with that person.

Citation: National Credit Act, 2005 National Credit Act

What is a default on my credit report?

A default listing is an adverse listing that got listed on your credit profile 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. If payment is not received further legal action is to follow.

To avoid legal action, you still have time to make a payment arrangement to pay the outstanding debt. The debt collector will proceed to collect the full outstanding amount due. Most credit providers understand circumstances happen and will accept a realistic repayment arrangement. Please note that credit providers are not obligated to accept any payment arrangement. In the case where you have defaulted on a vehicle finance account, the financier will most likely repossess the vehicle. They will do so without entering into a repayment arrangement.

Contact us should you have defaulted on your vehicle or home loan finance accounts. We will protect those assets from repossession.

What is a default judgment on my credit report?

A default judgment is a listing on your credit report. This listing is when your credit provider approached a court to get payment from you for long-overdue debts.

Judgment listings have negative implications for your credit bureau score. These listings must get sorted out as soon as possible to avoid further damage to your credit score.

Judgment listings will remain on your credit report for 5 years. The default judgment will get removed as soon as the debt gets settled. 

What does it mean if my accounts are in arrears?

What is a Credit Score?

Credit providers rely on credit scores when assessing credit applications. Credit scoring consists of a statistical analysis of the creditworthiness of a consumer. 

The credit score matrix varies from Credit Bureau to the Credit Bureau. 

These score numbers range between 300 and 850. There are 7 categories that usually make up your credit score.

1. Repayment history
2. Type of accounts.
3. How many new accounts.
4. Age of accounts.
5. Outstanding Balances.
6. Adverse accounts (judgments, defaults, trace alerts and notices)
7. Amount of credit inquiries.

Please note that a credit score only ranks a consumers credit risk. Having a good credit score does not mean you will qualify for credit. Credit providers will still do affordability assessments. These affordability assessments is now a legal requirement. 

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

To read more about credit scores please visit: https://creditsalvage.co.za/index.php/all-blogs/41-ultimate-credit-score-guide-2020 

To read more about credit Clearance please visit our blog.

How can I get a copy of my credit report?

The credit act makes provision for consumers to get a free credit report once a year. Simply contact the credit bureaus and request your free credit report. The bureaus will request a copy of your ID and proof of residence

Section 72(1)(b)(1)(aa) reads as follow

"Every person has a right to inspect any credit bureau, or national credit register, file or information concerning that person without charge as of right once within any period of twelve months"

To get the contact details of the bureaus please visit our resources page

What information is not recorded on my credit report?

In terms of current credit Act regulations, the following will not appear on your credit profile

• Medical History
• Religion beliefs
• Political affiliation
• Race
• Sex
• Trade Union membership

Does the Credit Bureau decide the outcome of a credit application?

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. It collects consumers and business account information. The bureaus collect this information from banks, credit providers and service providers.

A credit bureau is a registered private company under section 43 of the Credit Act. The registered credit bureau reports only on accurate credit information. It makes credit-related information available to banks, credit providers and leasing companies.

Credit providers will assess credit applications based on the credit information supplied.

What is prescribed debt and what is meant by prescription?

Prescription is a complex piece of law and we will simplify it here. Prescribed debt is if debt gets extinguished after a certain period. 

For example, there is no obligation on the consumer to repay the debt after a certain period.

• A debt gets deemed as prescribed under the Prescription Act 68 of 1969 if the following occurred.
• No payment towards an account for at least 3 years.
• No acknowledgement in any way that the money is owing.
• have not 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 any of the above criteria are present.

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 are private companies registered under the National Credit Act (NCA)

Credit Bureau Facts:

• Credit bureaus collect and maintain consumer credit information. 
• Credit bureaus report to the National Credit regulator NCR. 
• Collected consumer credit information gets made available to credit providers. This information gets supplied as a credit report and it shows 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. 
• There are 4 major Credit Bureaus in South Africa, Transunion, Experian, XDS, and Compuscan.

What is a Credit Report?

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.
• Employment history.
• Adverse listings include judgments, defaults, notices and trace alerts.
• Payment profile of all past and current accounts.
• Credit inquiries made on your credit profile.
• Credit Score. In certain circumstances, Credit bureaus will offer this score for a small fee.

What is Credit Clearance?

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. This includes the removal of paid in full judgments. The process of credit clearance improves credit scores. Credit Clearance or visit or official credit clearance FAQ

To read what to do about being blacklisted please refer to the following article - Meaning of being blacklisted

What is Sequestration in South Africa?

Sequestration is a legal process in South Africa where an application gets done by a sequestration advocate to the High Court. This process is 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 get declared Insolvent. This process falls under the Insolvency ACT 24 of 1936.

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

Once an order for Sequestration is successful all assets in the insolvent estate gets auctioned off. This is to ensure your credit providers receive 20 cents 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 and property.
• 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. 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. For 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. It is only for general credit clearance information purposes. For more information on Sequestration please consult your attorney.

Removal of A Credit Judgment?

A rescission of a credit judgement 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 rescission of a credit judgement.

You may apply for rescission of judgement if you can prove that when the judgement was granted against you, you were not intentionally in contempt of court. You will also need a legitimate defence against the action instituted against you.

You are also entitled to apply for rescission of a credit judgement if you have paid the plaintiff in full. The plaintiff must also consent to the removal. You and the plaintiff can agree to abandon the credit judgement. Notice of the abandonment may get filed in the court record.

Credit Judgement gets deleted from the bureaus' records after five years.

What is a Delphi Score?

Experian makes use of the Delphi credit score. This is a credit score that ranks your credit rating. The Delphi score will only appear on an Experian credit report. The Delphi score gets calculated by complex algorithms. It 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.

Credit Clearance Ultimate Credit Score Guide - 2020

How to cancel debt review: How to cancel Debt review and Debt counselling!

What is a Credit Clearance Certificate 2020?

How to Recover From Compulsive Spending with Debt counselling

What is an Emperica Score?

An Empirica Score is a credit score. A credit score is a summary of positive and negative factors on your credit report. The Score aims to predict how likely you are to honour 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.

It is worth mentioning that not all credit scores are the same. TransUnion provides an Empirica credit score on request.

Source

• https://www.transunion.co.za/
• www.experian.co.za
• www.Compuscan.co.za
• Credit Clearance FAQ page
• For Credit Clearance Contact Us