How to Interpret Your Credit Report

While meeting most loan related prerequisites is something that the majority of borrowers can manage, one requirement that many fail to meet is that of clearing the credit checks. In fact, not surprisingly, this is one of the prime reasons why loan applications are rejected in South Africa.

The reason why this happens is that not many South African citizens understand how their credit history works and how it affects their ability to borrow. The trick to getting around the credit history problem while applying for loans is to get a credit report and study it.

Every South African is entitled to one free credit report from any one of three credit bureaus operating in the country in one year. Studying the credit report, however, can be challenging for many people. If you have also ordered your credit report and need help in figuring it out, here is a small guide on how you can interpret it.

1. Contact information and employment status:

Each credit report will carry contact information of the individual for whom it has been formulated. This information is drawn from the latest loan application and is stored to maintain contact with the individual as and when required.

Furthermore, this section would also contain other forms of personal information such as marital status, spouse’s information and employment related information. You need to ensure that all this information is accurate so as to improve your chances of having a loan application approved.
2. Credit summary:

Your credit summary will contain a collation of all your credit history in the form of loans taken, loans paid, and adverse actions taken against you. The credit summary would contain the following information:
a. Judgement: This is a court judgement directed at the borrower to pay outstanding amounts. Lenders usually ask for it when borrowers miss repayments and are not accessible.
b. Notices: Notices are various other forms of lender legal action such as administration orders, sequestration, and rehabilitation orders.

c. Default: Defaults are listed by lenders for non-payment of the monthly instalments. These mainly have to do with you missing your payments towards credit accounts.

d. Trace alert: Trace alerts are placed on credit records by lenders looking for new contact information about a borrower because the previous one is inaccurate.

e. Consumer remark: This is information pertaining to your situation. A good example of this is a case of your identity document being stolen. In such a situation, this information would be put on your credit report so that potential enquirers can also see this fact.

f. Enquiry: Enquiries are instances of your credit report being accessed by lenders in the country. These are recorded and put in your credit report. The enquiries section would contain all enquiries made for your credit report in the last two years.

g. Notarial bond: A Notarial bond will be entered on your report by the Registrar of Deeds. It is not considered to be negative.
3. Payment profile or account history:

This section would contain the summary of all your accounts in terms of their opening dates, amount of money borrowed, the payment conditions, your payment history, and outstanding balance.

Getting and interpreting your credit report periodically is something that is very important because it not only gives you a chance to improve your credit history but also allows you to pinpoint cases of identity theft.