My Credit Status
How Does Marrying Someone With Bad Credit Affect My Score?
Your credit score is a grading given to you based on your individual creditworthiness. An automated evaluation is done on your credit history, based on how you repay your debts and how often you apply for new credit. Your monthly salary, investment earnings and current assets also affect your rating. If you are previous repayment behavior demonstrates that you are unable to repay debts in full and on time you will find it very difficult to secure a loan in future.
Read more on how to get a credit card even if you have a bad credit rating
Married couples generally maintain two separate credit records and histories. However, if you decide to take out a loan with your spouse, all payment history from then on will be recorded on both credit reports. When creditors generate reports, they are required by law to report information on a joint account in both of the account holders’ names. It is important, therefore, that couples discuss their financial positions before getting married. Being aware of your spouse’s credit history can help to maintain a healthy financial position after marriage and reduce financial strain.
Once you get married, it is also imperative that each of you have your own separate checking accounts and credit cards. This way you will be able to sustain your own active credit record. If there are long periods during which you do not have any credit history, you will not be able to take out loans by yourself. Both you and your spouse should make sure that you pay your bills on time because late payments are the fastest and easiest way to destroy your credit rating.
Although your spouse’s bad credit rating may not affect your individual credit score, if that person continues to be irresponsible about debt repayment, both of you may suffer if you maintain a joint account. However, there are several actions you can take to protect your credit rating. For example, do not sign joint agreements, limit authorized users and keep checking accounts separate. These recommendations will help you to keep control of your finances and preserve your good credit.
Read More: Home Loans For Blacklisted Clients
How To Get A Credit Card If You Have Bad Credit
Firstly, its important to note that if you currently have a bad credit score – acquiring more debt may not be the best idea.
A bad credit score is often an indication that you have not been meeting your monthly debt repayments, and taking on even more debt might not be a smart decision.
Although everyone has their own unique situation, and often some extra cash flow will help can help you through a lean month or two until you’re able to get back on your feet.
It’s important to note that having bad credit won’t necessarily prevent you from getting a credit card, but it can make getting the nessesary finance much more difficult.
- Apply for credit cards at smaller retail stores. Sometimes these companies are more willing to give you a chance. If your application is accepted, make a small purchase and pay at least the minimum payment every month and on time. (If you pay more than the minimum payment, you won’t pay as much in interest charges.)
- Go to your bank, savings institution or credit union. If they already have your business, they may be more willing to give you a credit card.
- Ask a friend or family member to stand surety for a credit card. Remember that their credit record counts as well, so choose someone with good credit. If you can’t pay back the loan, they must, and it will appear as a blemish on their credit rating
Why You Are Being Declined Even With No Late Payments
Often clients are surprised to find that their personal loan, home loan or credit card applications are decline even though they have no late payments on their credit records.
But, being behind on your payments isn’t the only thing that indicates whether you are a credit risk.
It’s often not enough to simply have no late payments, when you actually have no active credit accounts. It suggests you have little or no active, recent credit history.
Lenders are trying to determine whether you are able to handle credit repayments based on your recent repayment history.
With no credit history there may be insufficient information upon which to base a lending decision.
Recent credit activity is necessary for predicting lending risk, and therefore, for calculating credit scores.
Paying utility bills, cellular telephone bills, or other monthly fees is not reported to the national credit reporting companies, and so don’t help you qualify for a credit card offer.
Ask your bank if it can work with you to open a credit account. Even a small installment loan can help get you started. A positive payment history is the first step toward qualifying for a new credit card account.
Read More: Why It’s Important To Have And Use Your Credit Cards
How To Fix Your Personal Credit Record
FACT: About 47% of all credit active South Africans have fallen behind on paying their bills
That means more than 8 Million consumers will find their credit records are blacklisted or impaired.
A blemished credit history could even work against you when applying for a job – in certain circumstances, employers are allowed to take a look at your credit record.
How to get your credit record into shape:
1. Paying your bills is not enough.
It simply has to be on time.
Even if you paid the minimum outstanding balance on some credit cards only one day late, it could appear as an imperfection on your credit record – and may stay there for up to a year. If your creditor handed the debt over for collection or took legal action, it will sit on your credit record for two years – even if you paid the debt back.
If there was a court judgment about your debt (if you ignored a summons, for example) it is held on the credit bureau system for five years.
Neglected, overdue medical bills are some of the biggest causes of SA credit record blemishes.
2. Check your credit record.
All South Africans are entitled to one free credit record a year. You can get it by contacting one of SA’s credit bureaus, including Compuscan, TransUnion, Experian or XDS. They can send it to you via email, fax or post.
On your credit record you will find both positive (good payment history) and negative (late or missed payment history).
3. Correct mistakes of your credit report
It is a good idea to check your record before you apply for credit, in case there is incorrect information.
If you do not recognise or understand certain information on your credit report, you may call the credit bureau and query the information.
You can lodge a dispute about incorrect payment details with the credit bureau, which is obliged in terms of the NCA to investigate and find credible evidence to support a disputed listing within 20 business days.
Your credit report should show that a dispute has been lodged and it will not be on display for the duration of the investigation. If the information can’t be verified in 20 business days, it will be removed. The result of the investigation will be sent to you by email or sms, or an updated credit report will be supplied.
4. Settle your debts.
If you are behind on payments, try to pay off the debt. If the amount is settled, get a letter from the creditor and ask the institution to inform the credit bureau.
5. Think like a creditor.
Each creditor has a different rating or strategy when considering an application for granting credit. Most will assess your creditworthiness with an electronic programme which gives weights to different aspects of the information you have supplied, as well as information obtained from a credit bureau.
Understanding What Your Credit History Includes
The National Credit Act (2005) provides for the general regulation of consumer credit and improved standards of consumer information and regulates the use, management and access to credit information.
Your individual credit history includes all personal, address and contact information.
It also include a list of all your credit agreements, current and up to two years old.
Your credit history will also include information about any missed payments, defaults, judgments, notices and whether you are under debt review.
Even a list of inquiries to your profile is recorded, this is to help track how many applications of credit you’ve made recently.
More than 35 million accounts and the payment thereof are shared through the credit bureaus by the Credit Providers Association on a monthly basis and accessed by credit providers and insurance companies each time you make an application. The obligation on a credit bureau is to securely store, manage, maintain and release information only as stipulated in the National Credit Act.
This information is very dynamic. Every time you apply for credit, the information captured on the application form is shared with the credit bureaus along with your account payment information, keeping your information up to date.
Importantly, the NCA allows for access to your information without your consent for the permissible purposes as laid out in the act.