Consumers clueless about credit scores

2012-07-10 09:46

A survey has found that many South African fail to realise the importance of knowing their credit score, with almost three quarters of those polled saying they did not know their credit score.

The poll conducted by Just Money, an online guide to money, revealed almost three quarters (73%) of people did not know what their credit score was. The flash poll also revealed that only 18% knew their credit score, while 9% didn’t know what a credit score referred to.

“Knowing your credit record is vital, as it is an indicator of your creditworthiness. Credit scores are used by lenders to decide on whether to give you a loan. Employers, insurance companies and landlords can also ask to check your credit score, so it’s worthwhile knowing what your credit score is.

“A good credit record means you are less likely to be rejected for mortgages, car or personal loans,” said editor of Just Money, Angelique Ruzicka.

“Our poll unfortunately shows that consumers don’t understand the importance of knowing their credit score and there is clearly a need to create more awareness around this issue, so that more people regularly check to see if their finances are in order,” added Ruzicka.

Ruzicka warned that those that have never checked their credit score run the risk of losing out on that dream home or car as they could be rejected for a loan because they have a poor credit score.

She added that consumers could also run the risk of having their identity stolen. “Credit active consumers should check their credit score through credit bureaus like Experian, Transunion or XDS at least once a year and go through it line by line to ensure that all is in order.

Most credit bureaus give you one free credit report a year and thereafter charge a nominal fee, so it’s an inexpensive exercise,” says Ruzicka.

According to the National Credit Regulator in the quarter ending March 2012, 10 357 disputes were lodged in respect of the accuracy of the information recorded on consumer credit records.

More disputes were resolved in favour of complainants (7 722) as compared to disputes where credit records remained unchanged (1 646).

“This is another reason for you to check your credit score, as there is always a chance that the incorrect information has been submitted to a credit bureau,” added Ruzicka.

“There are also a number of things that could affect a credit score negatively, including late payments, outstanding debt and the number of creditors you have.

“Consumers could be rejected for a loan for any of these reasons so it’s vital that they find out what they are doing wrong so they can take steps to correct their ways and improve their credit score going forward,” concludes Ruzicka.

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