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The myths, truths about credit report

A good credit report can in fact give you better access to credit, so why would you not want to take advantage of getting a free annual credit report so you can check your credit status and fix it if needs be?

In South Africa, not many people are keen on knowing their credit status because of various reasons best known to those individuals, but most of them are nothing but unfounded theories and myths.

I decided to visit Sharon Coppola, a senior executive for risk and compliance at Experian South Africa, and she unpacked the myths and truths behind credit reports and credit scores

"These provide consumers with a good indication of their financial wellbeing, and to gauge areas that need to be improved upon, while giving assurance that all credit information is accurate.

"All of these are imperative for ensuring a sound credit reputation," explains Coppola. "Furthermore, regular checks protect consumers against the possibility of identity fraud."

This is a good enough and a compelling reason why people should take their credit reputation and scores to heart. Here are a few myths that prevent people from getting their reports as shared by Coppola. They believe:

Myth 1: Credit reports can only be accessed by credit providers.

Fact: Anyone can access their own credit report - and for free - once a year. Your credit report gives you the power to manage, protect and improve your personal credit information.

It also shows information that a lender will see when an application for credit is made. Checking your credit report is a sign of responsible credit management for managing a healthy credit standing.

Myth 2: You cannot challenge information reflected on your credit report.

Fact: The National Credit Act has made provision for consumers to challenge the accuracy of information contained in their credit report. Once your identity has been successfully verified, the dispute process will ensue, with the credit bureau requiring the source of the information to verify the accuracy.

Credit bureaus have 20 business days to investigate and resolve information that has been challenged.

If you are not satisfied with the outcome of the information that you have challenged, the Credit Ombud may then be contacted on 0861-662-837.

Myth 3: Credit bureaus decide whether to give you credit or not.

Fact: Credit bureaus record consumers' repayment behavioural trends to determine their creditworthiness - they do not decide who gets credit and who doesn't.

Credit bureaus provide factual information received from multiple sources that are used by credit lenders in their scoring and assessment processes.

The decision to grant credit is made by the lender. A credit score provides lenders with an indication of an individual's ability to repay debt and is a measure of both their willingness and capacity to do that.

Myth 4: Credit bureaus can blacklist me.

Fact: Credit bureaus do not blacklist - instead they are responsible for acting as a library, receiving, collating and maintaining information and data concerning consumers and issuing credit reports.

They provide information about your credit history and do not offer opinions or comments about whether you are likely to afford credit applied for or repay credit agreements that you have entered into. Lenders make their own decisions using all the information they have available to them. The information stored is both positive and negative.

Myth 5: Someone can fix your bad credit report for you.

Fact: There is nothing that a credit repair company can do for you that you can't do yourself. No one can remove accurate information from your credit report.

Reputable debt counselling services can help you come up with a plan to repay your debts, but the only legitimate way to enhance your credit score is to practise good credit management.

Thedream@winniekunene.co.za

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