Steps to disputing your credit rating

A credit rating is the numerical score (between 350 and 850) of a person's credit profile. This score is determined by a number of factors which essentially symbolise credit worthiness.

The point of this record is to protect credit providers against consumers who enjoy living lifestyles they cannot afford. Approximately 45 different factors form a credit profile including: the number of credit accounts you have; number of missed credit repayments; how much you currently owe; and the types of credit you are using all come into play.

Everyone starts off with a perfect 850 score and the factors mentioned above, along with others, gradually bring down the score. You do not want your score to go down as the whole point is to be as close to 850 as possible.

Many of us would not know what to do or where to go if we were ever faced with a situation where we wanted to make a credit purchase and unexpectedly were told that we cannot because of a negative listing with a credit bureau.

South Africa's National Credit Act (NCA) of 2005 provides for, amongst other things, the right for consumers to dispute information that is incorrect on their credit reports.

In a situation where there is incorrect information on your credit report, there are six steps to follow to make sure that the error, if it is one, gets rectified:

  1. Firstly, find out which credit bureau gave you the bad credit rating (South Africa has four credit bureaux: Transunion, Experian, Compuscan and XDS).
  2. Then, approach the bureau and find out what led to the negative listing. Check if the information is indeed true.
  3. If it is true, you unfortunately have to then find some means to take your score back up. If, however, the information is incorrect, lodge a dispute with the bureau. A reference number should be given in recognition of your dispute.
  4. According to the NCA, the relevant credit bureau then has a maximum of 20 days to carry out an investigation and correct your credit rating if need be.
  5. If the bureau does not do so timeously; does not respond to you at all or you are not content with their conclusion, you can then escalate the matter to the Credit Ombudsman.
  6. If you are also not satisfied with the Ombud's findings and ruling, you can then act through the courts, although this will be your last resort.

The Credit Ombudsman is the "watchdog" of all credit issues. His job includes, inter-alia, resolving disputes between customers/businesses and credit bureaux, payment distribution agents, debt counsellors or credit providers. Given that the Ombudsman acts under the NCA (an Act created specifically to help and protect credit consumers), you can trust that he will generally be on the consumer's corner of the fight. Implicitly, you can also trust that his judgement, whether in favour of or against you, will have been the best he could take given the relevant set of facts. But do not let this discourage you from approaching the courts if you really do feel that you have been negatively prejudiced by incorrect information.

Lodging a complaint on any level of the abovementioned steps is free of charge. The only time you get charged is if you decide to use so-called "credit repair" agencies who promise to have your credit record cleared in "less than no time". Be very careful of such agencies as most of them ask you for an upfront fee before carrying out the service-which is illegal.

In reality, no organization apart from credit bureaux or a court can "repair" or completely clear your credit record. This is because there are laws guarding how long a credit record should remain evident for. Defaulting for example has to stay on your credit record for a maximum of 3 years, while bankruptcy can stay on your record for up to 10 years.

As you can probably tell, this is an incredibly long time to constantly have the same thing held against you. The Ombudsman does, in special cases, reduce the amount of time that the negative information stays on a record, provided that you missed your credit payments because of reasons out of your control, and if you actually did try to make payments timeously and you did repay your debts in full as soon as you could.

The proper way to get your record cleaned up (other than waiting 10 years) is to seek the help of Consumer Credit Counsellors. These are free, government-provided services aimed at helping you pay off your debts and improve your credit rating.

Other than that, you can repay your debts in full and then pay for lawyers who will approach the courts on your behalf to have the record cleared.