Credit Records – What Is It All About?
Having a clear credit record or a good credit score is of utmost importance, but why? And how does one ensure that your credit record is and remains clear in order to ensure that your credit rating or score remains at its maximum?
Certain updates to a person’s credit record can adversely affect their credit score, these being defaults on payment, judgments and debt review. These listings and how to remove such listings are elaborated on more fully below.
Once a person defaults on any payment that was due to a credit provider or creditor, the credit provider or creditor is in a position to apply for a listing to be added to the person’s credit bureau profile indicating the defaulted payment.
These listings can be done easily by creditors after having complied with the National Credit Act (the NCA)’s provisions in this regard, these provisions being prescribed by Section 72 of the act. The requirements are that the creditor must advise the person in writing that he or she is in default of a payment or payments due, and should provide them with a period of 20 days within which to either make payment, alternatively to lodge a dispute with the creditor regarding the payment or payments being due. If no response to the said letter is had and no dispute is lodged, the creditor may proceed to send the person’s information to the credit bureau for listing of a defaulted payment or payments.
Default payment listings remain visible on a person’s credit bureau profile for a period of one year from listing date and after said time has elapsed, the listing is automatically removed. Should the creditor however inform the credit bureau that further amounts have been defaulted on or a further written communication is sent to the person notifying him or her of the default, the listing will remain on that person’s credit bureau record for a further year.
In order to remove such a listing, the debtor should approach either the creditor- if the amounts are in fact outstanding, or the credit bureau with which the default was listed if the amounts are disputed.
If the amounts due are admitted, the debtor may negotiate with the creditor for payment of the outstanding amounts and upon such payment will consent to the removal of the default listing. Most creditors have access to the credit bureaus by means of subscription and therefore removal of a listing a matter of mere request for the removal thereof. The removal of listings takes a week or two depending on various circumstances.
Should the default listing or amount claimed to be due be disputed, the dispute may be raised to the credit bureau at which the default was listed. The debtor shall put forth the reasons for such dispute, which reasons will be forwarded to the creditor for a response. Ultimately, if a dispute is present regarding either the process followed or the indebtedness of the debtor, the listing shall be removed in order for the dispute to be resolved. A debtor can prevent a listing being done by lodging a dispute at the time of receipt of a letter advising the debtor that the creditor intends on listing the default on the credit bureaus. The dispute may also be taken up directly with the creditor that has caused the listing to be added.
Should a creditor proceed with legal action against a defaulting debtor and judgment be granted by a Court, the judgment details will be listed on the credit bureaus. The Courts have a designated officer or officers who sends the details for all judgments granted to the credit bureaus for listing thereof. Details that are included in such a listing is information such as the Court, judgment amount, attorney on record, judgment creditor, contact details and date of judgment. Judgment listings remain on a person’s credit record for a period of 30 years if it is not removed.
The manner in which to remove a judgment is by an application for rescission of judgment. The first step would be to contact the creditor to establish what judgment was granted for. If the debtor admits that he or she does in fact owe the money to the creditor, one may proceed to negotiate with the creditor for payment of the judgment debt and, once payment has been made in full, request a letter from the creditor consenting to the rescission of the judgment. Once such letter has been obtained an application for rescission by consent may be launched at the Court in which judgment was granted.
If the debtor however advises that he or she was not indebted to the creditor for the amount for which judgment was granted for any given reason, then the correct approach is to launch a rescission for judgment application, in which application the debtor will submit reasons why the amount is not due or present his or her defence to the claim. If the Court is in agreement that the debtor did not in fact owe the money, or judgment was obtained irregularly for any given reason, then the rescission will be granted, and the matter shall proceed on an opposed basis. This means that the debtor will then enter his or her appearance to defend the action and present his defence to the Court for adjudication.
It may also happen that the creditor decides at this juncture to abandon the action and not to proceed to trial thereof, in which case the matter may be dealt with finally by the Plaintiff’s withdrawal of the action.
Once a person (referred to in the NCA as a consumer) applies for debt review with a debt counsellor and a determination is made by that debt counsellor that the consumer is in fact over indebted, the debt counsellor is obliged to inform the credit bureaus of such application for debt review. The debt review status or flag is only removed if a Court order compels such removal or a consumer has repaid all the debts under rearrangement and the debt counsellor has issued a certificate advising of such repayment. The debt review flag does not expire and is not removed after a certain period of time but is only removed after intervention by either the Court or debt counsellor.
If a consumer wishes to cancel the debt review at any time during the process – therefore before all outstanding debts have been settled – it has to be done by launching an application at Court requesting the upliftment of the flag or the rescission of the debt restructuring order. The debt counsellor cannot remove the flag or order listing at any time after he or she has made the determination of over-indebtedness and prior to repayment of all credit agreements. This determination is done at inception of the process by the debt counsellor and before the listing is done, which means that the debt counsellor does not have the powers to remove a debt review listing. The consumer therefore has no other option but to approach the Court for an order uplifting the flag.
Once a consumer has paid all the outstanding amounts to his or her creditors in terms of a debt restructuring Court order, the debt counsellor may issue a certificate stating same. On issue of such certificate, the debt review flag may be removed.
Having regard to the above information, it is most certainly possible for a person to restore his or her credit record if certain listings appear thereon. Once the listings have been removed, the person will again be in a position to freely obtain credit and no negative inferences can be drawn from their credit record. It is however imperative on the person him- or herself to ensure that they know what the status of their credit record is and to obtain the necessary legal advice and assistance to ensure that the said record is cleared if any listings appear thereon. A listing in any form mentioned above will prevent a person from obtaining credit such as cellular accounts, loans or bonds and may even prevent a person from securing a lease agreement. The consequences of such listings are dire and should be dealt with swiftly to ensure minimum damage to the person’s financial status and records.
Please feel free to contact our office for advice or assistance in relation to any listing that may appear on your credit record which you desire to be removed.