Money Talk - Give yourself some Good Credit

With each personal loan form you receive in the post, you might as well receive a free shovel to dig your own grave. Everyone has received the letters saying Congratulations Mrs X! You have just been approved for a personal loan of R80 000. Please fill out the form below to complete this transaction. This form of social engineering sits right up there with the likes of many heinous crimes all too terrible to mention. The scary thing is that people still fall prey to this financial ambush. Unless you have some huge debt to settle (in which case you probably shouldnt even be sitting there right now twiddling your thumbs, a personal loan from any company other than a reputable financial institution for reasons given only by your attorney, financial consultant or through clear divine intervention should be torn up and disposed of immediately. The National Credit Bill soon to be an Act will help curb pre-approved loans to consumers who have not given their prior consent to being included. However more importance should be placed on consumer credit education and the understanding of responsible borrowing.

Buying on credit is not bad at all, provided of course that you can meet the full repayments on time until the total amount has been reached. If not, then that pile of unused credit cards should be sent back to their creator. Lauren Kleynhans of TransUnion ITC says that default data is the negative information supplied to a credit bureau by the store or bank, if you default on your agreement with them by not paying your account. This default remains on your report for three years. A judgement is worse. This is when you fall behind with your accounts, or fail to make payments and/or fail to respond to reminder letters from the store or bank. The respective account supplier may then apply for a court judgement. A judgement is granted when the court has ordered that you make payment on the debt or outstanding account. A judgement remains on your report for five years.

Kleynhans gives some tips on how to effectively manage your credit profile. Always budget and never buy on credit without knowing if you can afford the repayments, says Kleynhans. Ask the credit manager to show you exactly how much you will have to repay each month and for how long, depending on what you spend. Don't spend up to your credit limit. Instead, set your own limit and stick to it. Try keeping credit repayments between 20 - 30% of your income. For instance, if you have a R5000 income per month, keep your all your credit repayments to within R1000 - R1500 per month. Always pay your accounts on time and pay the full amount that is owed each month. Remember to always notify the respective company or bank of any changes to your address. If you are unable to make a payment due to unforeseen circumstances, talk to the company concerned and make alternative arrangements to pay back what you owe. Never ignore a letter of demand for payment. Instead make a phone call or write a letter to explain your situation. More importantly, never ignore a summons to court for nonpayment. If ignored, this could become a very serious reflection on your credit report.

Finally, one must ask the question: What are your rights as someone who has a credit record, when it comes to verifying facts, statements and payments? Accuracy is crucial to TransUnion ITC and many other credit bureaus, explains Kleynhans. We encourage you to contact us and request an investigation into your disputed account. If you find an error on your credit report or need to send us proof of any changes to your contact details, TransUnion ITC will update your information and also investigate where required. If information is found to be inaccurate, or can no longer be verified, it will be deleted. If an investigation does not resolve the question within the allocated 30 business days of the process, then the matter can be referred to the Credit Ombudsman. V Everyone has received the letters saying Congratulations Mrs X! You have just been approved for a personal loan of R80 000.

Courtesy SA Complex News

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