Most consumers unaware of credit status, says credit monitor

2010-10-12 13:13

Most consumers have no idea what their credit status is, and even less of an idea of how to find definitive and reliable information on how to use their credit status to their advantage.

“They’re unsure of how to reduce their debt burden and take back control of their money,” Kudough, an online resource for consumers to monitor their credit standing, said in a statement today.

“National Credit Regulator numbers tell the story,” CEO Chris van Rensburg said.

The number of South Africans with records of good credit standing had declined in the last three years.

Only 54% of 18.21 million credit-active South Africans were in good credit standing today while in June 2007, more than 63% of consumers held credit records of good standing.

Van Rensburg said impaired credit records increased to more than 25 percent in the first quarter of 2010 and 17.2 percent of all credit-active South Africans held accounts today that were more than three months in arrears.

“Many people first get wind that they’re in trouble either when their application for a loan – inevitably sought to pay off debt and ease their cash flow – is declined or when they get letters of demand for unpaid debts.”

He said the less a consumer knew about his credit standing, the more of a financial mess he was likely to get himself into.

“And the greater the mess you’re in, the harder it is to sort out and rebuild a good financial risk profile.”

Information from three credit bureaus in South Africa (TransUnion, Experian and XDS) enabled consumers – together with Kudough – to rate their credit status on a scale from A+ (for excellent) to F (poor).

“We use exactly the same set of data/information that banks and credit providers, such as retail stores, would run on consumers when applying for credit.”

Van Rensburg said those who managed credit wisely knew how valuable a tool a good credit status was.

“It gives you access to more money at better rates and it saves you money now and in the future. A good credit rating enables you to save and invest bringing a sense of confidence that good fiscal discipline instils.”

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