In the world of personal finance, few entities wield as much influence as credit bureaus.
Although they have made an effort to become more transparent and consumer-friendly in recent years, they do not openly share their decision-making processes and hold significant power over individuals’ financial lives.
However, this doesn’t mean you don’t have recourse if you have a credit bureau issue. Knowing your rights as a consumer and how to address problems will go a long way toward resolving the situation.
Here, we'll delve into the intricacies of credit bureaus in South Africa, common issues encountered, and the role of the Credit Ombud in resolving disputes.
What is a credit bureau?
A credit bureau is a financial institution that tracks your financial records with regards to lending and repaying money from other institutions, and employment data, amongst other things.
Credit bureaus compile credit reports summarising your credit history, payment behaviour, and outstanding debts. These reports are crucial in determining your creditworthiness when applying for loans, mortgages, or rental agreements.
The major credit bureaus in South Africa are TransUnion, Experian, VeriCred, and Expert Decision Systems (XDS).
What problems do people encounter with credit bureaus?
Credit bureaus aren't infallible and can make errors, like any other institution. Here are some common issues you might encounter, and how they may affect you:
Errors on credit reports:
Incorrect information, such as inaccurately reported debts, missed payments, or accounts that don't belong to you and which can harm your credit score.
Identity theft:
If someone fraudulently uses your identity to open accounts or take out loans, it can seriously damage your credit standing.
Disputes and delays:
Resolving disputes with credit bureaus can be time consuming and frustrating, leading to delays in correcting errors on your report.
Know your rights with credit bureaus
Fortunately, South African law protects consumers’ rights when dealing with credit bureaus:
Access to your credit report:
You have the right to request a free credit report from each major credit bureau once a year. Reviewing these reports regularly allows you to spot errors and discrepancies.
Dispute resolution:
If you find inaccuracies in your credit report, you can dispute them with the credit bureau. A credit bureau is obligated to investigate your claim and correct any errors within a reasonable timeframe.
Data accuracy:
Credit bureaus must ensure the accuracy of the information they collect and report. They should update your credit report promptly with any corrections or changes.
Protection against identity theft:
If you're a victim of identity theft, you have the right to place a fraud alert on your credit report, which will prevent further unauthorised activity.
The Credit Ombud and how it can help you
When disputes with credit bureaus escalate, seeking assistance from the Credit Ombud can be invaluable.
The Credit Ombud is an independent mediator appointed to resolve disputes between consumers and credit providers, including credit bureaus. Here’s how the Credit Ombud can help:
-
Mediation: The Ombud acts as a neutral third party, facilitating communication between you and the credit bureau to reach a resolution.
-
Investigation: If necessary, the Ombud thoroughly investigates your complaint, ensuring all relevant information is considered.
-
Resolution: After investigating the matter, the Ombud provides a binding decision that both parties must abide by. This decision aims to resolve the dispute fairly and impartially.
Issues the Credit Ombud helps to resolve
The Credit Ombud has permission to intervene and resolve any complaints about credit information held by a credit bureau if they relate to the following topics:
-
Credit information that is incorrect or incomplete. For example, a default may show that you owe R200,000 when you owe R2,000.
-
Outdated credit information.
-
Adverse listings on a credit report produced by a credit bureau and credit providers' failure to give consumers 20 working days’ notice before publishing an adverse listing.
-
Consumers who have defaulted on debt repayments through no fault of their own, such as in the event of retrenchment, and have rehabilitated themselves thereafter.
-
Listings on a credit report regarding prescribed debt, that is, debt for which the borrower is no longer liable.
-
Listings of single debt that have been duplicated on the credit report.
-
Identity fraud.
-
Service disputes.
Need debt counselling or consolidation?
Explore DebtBusters' solutions for reducing your interest rates and unlocking cash.
Find out more
-
Costs and damages – for example, if a landlord lists the costs of damages to a property.
Can the Credit Ombud help with loan disputes?
The Credit Ombud can help resolve credit report issues, but its role is limited to credit bureaus, not the lenders themselves. It can't mediate disputes on loan terms or interest rates; however, it can certainly help if a loan is reflected incorrectly on your credit report.
Let's explore how the Ombud can assist with both bank loans and non-bank loans and other avenues for help and consumer rights in these contexts.
The Ombud’s role with bank and non-bank loans
Bank loans:
The Credit Ombud can assist consumers with disputes related to bank loans, whether relating to a mortgage, personal loan, or credit card issued by a bank. The Ombud can mediate between you and the bank to resolve the matter.
Examples of issues that can be resolved in this way include billing errors, unauthorised charges, or disputes over interest rates.
Non-bank loans:
Similarly, the Ombud can assist you if you’ve taken out a loan from a non-bank lender, such as a microlender, payday loan provider, or online lending platform.
When it comes to consumer protection, these lenders are subject to regulation under the National Credit Act (NCA), just as banks are. The Ombud can help address issues such as unfair lending practices, excessive fees, or harassment by debt collectors.
Other avenues for help
Regulatory bodies:
In addition to the Ombud, regulatory bodies such as the National Credit Regulator (NCR) play a crucial role in overseeing the lending industry in South Africa. If you believe a lender has violated the NCA or engaged in predatory lending practices, you can lodge a complaint with the NCR for investigation.
Legal assistance:
If your dispute with a lender escalates and legal action becomes necessary, seeking advice from a consumer rights attorney may be beneficial. They can provide guidance on your rights, represent you in negotiations or court proceedings, and help you understand any legal recourse available to you.
Debt counselling:
If you're struggling with debt or financial hardship, seeking assistance from a reputable financial counsellor or debt counsellor can provide much-needed support. They can help you understand your financial situation, create a budget, and explore debt relief options such as debt consolidation or debt counselling (also known as debt review). The debt counsellor will also negotiate repayment plans with lenders to lower your interest rates.
What about debt counselling complaints?
The Credit Ombud can deal with complaints associated with debt counsellors and their clients’ creditors, including banks, and complaints that consumers in debt counselling may have filed against a payment distribution agency.
The Ombud provides South African consumer education focused primarily on the credit industry and will help you solve any problems you have experienced with a credit bureau.
How to file a complaint with the Credit Ombud
Filing a complaint with the Credit Ombud in South Africa is straightforward and designed to help consumers resolve disputes with credit bureaus, banks, or other credit providers.
Here's a step-by-step guide on how to file a complaint:
-
Gather information: Gather all relevant documentation related to the dispute before filing a complaint. This may include copies of your credit report, correspondence with the credit provider or bureau, account statements, and other evidence supporting your claim.
-
Contact the Credit Ombud: You can reach the Credit Ombud through various channels:
- Online complaint form: Visit the Credit Ombud website and fill out the online complaint form.
- Email: Send an email outlining your complaint to the Credit Ombud’s official email address. Be sure to include all relevant details and attachments.
- Phone: Call the Credit Ombud’s toll-free number to speak with a representative who can assist you in lodging a complaint over the phone.
-
Provide supporting documentation: When submitting a complaint, attach copies of any relevant documentation that supports your case.
-
Await response: After you submit a complaint, the Credit Ombud will acknowledge receipt and initiate an investigation.
-
Receive resolution: Once the investigation is complete, the Credit Ombud will provide a binding decision on the matter. Both you and the credit provider are required to abide by this decision.
-
Appeal (if necessary): If you disagree with the Ombud’s decision, you have the right to appeal within a specified timeframe.
-
Follow-up: After your complaint has been resolved, follow up with the credit provider or bureau to ensure that any recommended actions are implemented in a timely manner. Keep records of all communications and correspondence related to the resolution.
Stay up to date and in control of your credit health
By understanding your rights and available resources, you can navigate issues with credit bureaus effectively. The Credit Ombud remains a valuable ally for ensuring your credit report accurately reflects your borrowing history.
