The power of your credit record

Private Property South Africa
Jackie Gray-Parker

Keeping your credit record in good shape is of utmost importance to a successful home loan application.

Credit records play an important role in the world of property. It is usually the first thing financial institutions check when would-be homeowners apply for home loans and the first port of call for landlords when assessing potential tenants. As such, it is imperative that your credit record is in good shape if you want to buy or lease a property.

From the moment you apply for your first store card or apply for a line of credit, these details are recorded and kept by a credit bureau. As per the National Credit Act, credit providers are entitled to access this information when assessing credit worthiness. Your credit record will include details such as credit agreements you have with approved financial service providers as well as details such as payment frequency, missed payments, overdue payments, judgements and even your likelihood to ‘squat’.

Albertus van Staden, Head of Credit at FNB Housing Finance explains the importance of a healthy credit record in the context of home loans.

“A home loan is usually one of the biggest investments made in your personal capacity. Banks and financial institutions will look at your individual credit profile before granting you the finance to buy your home. Proving that you can manage your debt obligations responsibly is vital. It is vital to pay bills on time, every time. If you have a neglectful attitude towards your creditors this will reflect at the credit bureau and may mean that you have to wait for your dream home.”

Likewise a poor credit record will reflect badly on any rental application that you make. If you feel that your credit record may get in the way of a rental or home loan application, it’s best to put your application on hold and first clear your record as the chances of being granted a home loan or lease are slim.

It’s possible to check your credit record for free once a year. Thereafter your credit record can be purchased for a minimal fee from the credit bureaus. Doing so will enable you to see whether or not you have any negative points on your record in need of correcting and that your accounts are up to date.

Even if you don’t think your credit record could be held against you it’s a good idea to check anyway. You may be surprised to find that your credit record lists incorrect information which could cause lenders or landlords to reject your application. For instance, there can sometimes be a lag where fully paid debts don’t reflect at the credit bureau. This needs to be updated and a letter issued by the credit bureau proving that the debt in question is in fact settled.

Of course scenarios arise where applications are rejected. If your application is rejected you have the right to ask for a reason. This will enable you to pinpoint exactly where the fault in your credit record lies, following which you can take steps to remedy it.

And what of the credit amnesty granted last year? Those who think their slates have now been wiped clean and can apply for home loans and rentals without any worries need to think again. Although certain allowances were made as per the amnesty, information pertaining to payment profiles and other crucial information didn’t just vanish. Payment profiles record a consumer’s payment pattern and is recorded on a monthly basis which means your credit record could still be used against you if you haven’t kept on top of it.

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