PERSONAL FINANCE
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any of us only check our credit score once we have been denied a loan or given a high interest rate. But this is often far too late to do so. Credit providers use your credit score to measure their risk in taking you on as a client before they approve or decline your application for credit, or for an increase in your credit limit. Your credit score is calculated by a credit bureau and while it is based on your credit report, it also takes account of how you pay your bills, how much debt you have and – importantly – how all of that compares to other creditactive consumers. 20
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Your credit score is not an endorsement or a criticism of you or your credit behaviour. It will also not determine whether you qualify for credit. That will depend on the credit provider’s own credit granting criteria – their own way of scoring their assessment of your risk. Your credit score gives credit providers a quick and easy overview of your general credit behaviour. According to TransUnion, fewer than 5% of South African consumers make use of the legislation that entitles them to obtain their credit report, free of charge, from every credit bureau every year. Regular examination of one’s credit report will enable consumers to check
that all the information in it is accurate. Sometimes there could be errors or areas of dispute. For example, there were 22 822 disputes lodged about information held on consumer credit records for the quarter ending December 2014, according to the National Credit Regulator (NCR). These disputes may have been no more serious than an error in name or address, but some could well have involved a far more serious issue, such as inaccurate reflection of payments made. A regular examination of one’s credit report could also provide timely warning to consumers that they might have been the victim of identity theft with the identity thieves running up enormous
