It is now a month and a half since the implementation of the much anticipated Removal of Adverse Consumer Credit Information Project, loosely referred to as “amnesty”, and despite-millions of records being wiped off consumers’ credit reports, they have come to realise that not all their credit problems will be solved by this much anticipated “amnesty”.
In the period since 1 April 2014, data from two credit bureaus indicate that they have removed a combined total of about 40 235 paid up judgments and more than 14,5-million pieces of adverse records from consumers” credit profiles. Although it is still early days, the information, as we have received it, indicates that quite a number of records have been removed.
The number of consumers who have benefitted is significant. Another important and positive spin off from the project is the fact that because of the publicity this campaign received, thousands of consumers actually took the effort to access their credit reports – many for the first time,” says Credit Ombud Manie van Schalkwyk.
“It is imperative to note that the numbers recorded do not refer to the number of consumers who have benefited, but should be looked at in relation to the 73,18-million accounts which are currently held at the credit bureaus,” he adds.
Since 1 April credit bureaus were inundated with calls from consumers and reported a significant increase in calls through their call centres and visits to their websites, with many of the calls relating to the removal of consumers” adverse credit information. There also was an average increase of 41% in the number of credit reports issued in April as compared to previous months.
“Our own office dealt with a 47% increase in calls through to our call centre just within the first four weeks after the commencement of the removal exercise, with callers mostly wanting to access their credit reports or wanting to know if they qualify for the amnesty.
“An important lesson from this exercise thus far is that consumers do not understand how credit reports work, especially the fact that it has many different sections as opposed to only containing “positive” or “negative” information,” adds van Schalkwyk.
“Consumers commonly have an unfounded fear of accessing their credit reports, but once they obtain a proper understanding of how their credit reports work, I believe that more people will make use of the opportunity to access their annual free credit reports and then stay up to date with what is contained in their reports,” continues van Schalkwyk.
Credit reports are generally divided into six major sections:
* Personal information – this section contains personal information identifying the consumer – names, surnames, gender, marital status, address and employment information
* Public record information – judgements, administration orders, sequestration orders. This information is sourced directly from the courts by credit bureaus – it will cover all legal action in relation to a consumer’s account, such as judgments, defaults, sequestrations, administration, debt review and other information recorded in the Deeds office or company details pertaining to the consumer. Information pertaining to paid up judgments has to be removed.
It will be up to the consumers to ensure that credit bureaus are provided with evidence of payment, as this payment information is not part of the public records.
* Adverse listings – this section contains information relating to default and collection action related listings. The report will reflect information relating to bad debts written off; accounts being handed over for legal action or debt collection; consumers defaulting or absconding or credit cards being revoked. All information which reflected as at 1 April 2014 (whether paid or not) has been removed.
This was a once-off removal. New listings are being recorded again.
* Payment profile – this section is one of the most important sections as it shows how consumers” conduct their accounts on a monthly basis – do they pay on time, do they pay the correct instalment amount, is there any action taken by the credit provider in a particular month (specifically for those consumers who are defaulting on their payments), when the account was closed.
Information in this section is commonly displayed in a rolling 24 month view, although some bureaus display the information for a five year period as permitted by the NCA. Only symbols and/or other denotations referring to defaults were removed. The rest of the monthly payment behaviour was not affected.
* Enquiries – this section records all enquiries from third parties relating to credit applications, insurance and employment made by credit or service providers will appear. Nothing is affected at all.
* Trace and fraud alerts – credit or service providers may trace consumers who they cannot contact due to old information at their disposal. They will list an alert in this section to reflect that status.
If a consumer has been a victim of fraud as a result of a stolen, lost or cloned identity document, they are able to request that the bureaus flag their identity numbers. Credit providers should call them first before opening accounts using their identity. This is a free service provided by most credit bureaus to protect consumers. Not affected at all
“It is important to note that all unpaid judgments will still remain on your profile for the duration of the five year retention period or until such time as you pay it off. If you default on any account after this removal of adverse information has taken place, such adverse or default information may be listed again on your profile.
“This information will also remain on your profile for the normal 2 year retention period, but once the new National Credit Amendment Bill is promulgated, the adverse information will be removed once paid up,” says van Schalkwyk.
Make it a point to check your credit report, especially after 1 June 2014 to make sure that all information pertaining to all defaults and paid up judgments have been removed. Consumers can contact the office of the Credit Ombud for free assistance should they find that information that was supposed to be removed still reflect on their reports.