Approval or Declining credit application is not solely based on Your Credit Profile. All Credit Providers in South Africa have structured own risk classification, risk management according to their business operational model. Credit providers employ different standards from Credit Bureau Score system and thus they usually have their own standard for a credit profile score. With that said, every credit provider is legally bound by the National Credit Act to check your Credit Profile before credit is given to the consumer. Also when credit is given, it is by law that the credit provider has to log in your details, the amount of credit requested and the duration term of payment.
The Myth of Credit Bureau Score
Each Credit Bureau functions independently and credit bureau do not share information about customers. The only time they can do so is when the National Credit Regulator authorizes them to do so. All Credit Bureau are subject to registration and approval by the National Credit Regulator. Each bureau has its own methods on how to establish a credit score. There is no uniform approach to setting a score. This means your score can is far from being an accurate reflection on your ability to pay, it’s rather a barometer established to give credit providers an idea. Credit providers are aware of this, and thus they too have their own standards independent from any credit bureau to establish a credit score.
Section 62 of the NCA.
Right to reasons for credit being refused
1) On request from a consumer, a credit provider must advise that consumer in writing of the dominant reason for:-
- a) refusing to enter into a credit agreement with that consumer;
- b) offering that consumer a lower credit limit under a credit facility than applied for by the consumer, or reducing the credit limit under an existing credit facility;
- c) refusing a request from the consumer to increase a credit limit under an existing credit facility; or
- d) refusing to renew an expiring credit card or similar renewable credit facility with that consumer.
2) When responding to a request in terms of subsection (1), a credit provider who has based its decision on an adverse credit report received from a credit bureau must advise the consumer in writing of the name, address and other contact particulars of that credit bureau.
3) On application by a credit provider, the Tribunal may make an order limiting the credit provider’s obligation in terms of this section if the Tribunal is satisfied that the consumer’s requests for information are frivolous or vexatious.
The idea for this regulation is to help aid the consumer understand where they stand in regards to obtaining credit and how much can be the limit. If the credit provider does not give this information to the consumer’s, it will result in violation of consumer’s rights, which is a transgression against the law of South African Republic. Any consumer who knows that the credit provider is not complying with the regulation as provided for by the National Credit Act can report such provider to the NCR. Website is www.ncr.org.za