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Before you commit to credit, you need to make sure that you can pay back this money in a responsible way.
This is because every person using credit has a credit report about their spending history.
This report is based on information that financial institutions, like banks, and service providers, like different shops and businesses, provide to credit bureaus. A credit bureau is an organisation that puts together all this information. Credit bureaus include companies like TransUnion, Experian, Compuscan and XDS.
You can request your credit report directly from the credit bureaus by calling them or applying online. You can request our assistance on obtaining your credit report once a year, and we will provide you with a summary view of your credit score and advise if you need further assistance with debt counselling.
When you then apply for credit, the creditors can then check your financial history from the credit bureaus.
The credit report includes information about all your credit accounts and any debt you have. It will include the exact amount of credit and debt you have as well as how you have much paid off. The report also includes personal details such as where you live and work.
It will also include negative information. This includes whether you have defaulted (not paid) certain accounts or debts; if any legal action has been taken against you; if you have been declared over indebted, insolvent, or if you are under debt review.
A credit provider must tell you at least 20 working days after your account goes into arrears (money that is owed and should have been paid earlier) that they will send negative information to the credit bureau to blacklist you. This should give you time to challenge the information if you believe it is wrong.
If you are under debt review and successfully complete the process, your debt counsellor will issue a special clearance certificate to the credit bureaus. The credit bureaus then clear your record and you are able to apply for new credit.
Each person is given a credit score that rates how risky it would be for a company or organisation to give you credit. It also suggests how much interest you should pay on a loan.
A high score indicates a low risk borrower, while a low score means a high risk borrower.
Here are some tips on how to improve your credit score:
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Our experts can guide you away from bad debt and towards good choices that help build a happy and healthy financial future.