When it comes to personal finances, the only thing that can compare to an individual’s purchasing power is his credit score because the two are usually interdependent. For example, if a person has enough purchasing power then his credit score would be good.
On the other hand, an individual with a bad credit score is unlikely to have enough of a purchasing power. The reason for this is that the state of personal finances of an individual has a huge bearing on his credit score and vice versa.
For instance, a person with good personal finances would always be able to get more credit and an individual who can get credit would always have good personal finances. What all of this means is that an individual’s credit score is, by far, one of the best markers of his financial state.
The credit score of an individual in South Africa is maintained by three different organisations which are known as credit bureaus. Every citizen of South Africa is entitled to receive one copy of his credit report for free every year.
The three credit bureaus active in the country include TransUnion, Experian, and Xpert Design Systems or XDS. The following are some highlights of each of these credit bureaus.
1. TransUnion: TransUnion has been active in South Africa since the turn of the last century as it was established in 1901. The company’s headquarters are located in Johannesburg but it also has a presence in other nearby countries such as Namibia, Zimbabwe, Botswana and Swaziland.
It should be mentioned that TransUnion boasts of being the biggest credit bureau in South Africa that maintains data on both individual consumers and business enterprises.
2. Experian: Experian is another globally relevant credit bureau active in South Africa. The South African division of Experian falls under the umbrella organisation Experian PLC which has headquarters in Dublin, Ireland.
Experian itself specifies that its business is based on helping commercial enterprises get closer to their customers.
3. Xpert Design Systems: Xpert Design Systems or XDS has the distinction of being the largest independently black owned credit bureau within South Africa. In addition to being the first, XDS also boasts of being the only black owner credit bureau in South Africa.
The working principle behind a credit bureau is that it would collate information from all the creditors in the country relevant to an individual. This information is sourced and compiled in a credit report which can be accessed by anyone who has the right to access it.
This right by law is granted to the creditors themselves who need the information to effectively evaluate the risk profile of every applicant. In addition to this, insurance companies that are also considered to be a form of creditor also have the right to access individuals’ credit information.
In addition to creditors, individuals or businesses can also access the credit report of people provided they have written consent for the same from the individual in question. Maintaining credit information on each individual in South Africa has three different benefits.
Firstly, it promotes responsible lending where lenders, empowered by relevant information, can deny credit to those people who do not have the means to pay it back. Secondly, it prevents cases of identity theft by allowing individuals to see enquiries about their credit report.
Finally, as individuals can access their credit history and pertinent information they have the capability to work towards improving the state of their personal finances.