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Q & A

What is credit?
The cost of credit?
What is a credit report?
What is a credit bureau?
How does a credit profile affect me?

What is credit?
You obtain credit when you borrow money to buy goods or services that you pay back over time, with interest and charges of the credit provider (person from whom you are borrowing, such as a bank, furniture or clothing retailer).

The cost of credit?
Before you enter into a credit agreement (contract), you must check the cost of credit. The cost of credit will include the interest rate to be charged, monthly service fee, once-off initiation fee, credit insurance if there is one, deposit if required etc.  The cost of credit may affect your decision to borrow. Remember that you can always save and purchase with cash.

What is a credit report?
Your credit report/profile contains information on all your credit agreements and any payment obligations you may have, how long you have had them for and how you have paid them. This includes any action that may have been taken against you for non-payment.

What is a credit bureau?
A credit bureau is a company that holds a data base containing information on every credit active person in the country. A credit active person is anyone who has taken credit, whether to buy a stove, jeans, a car or a house, or pay for something that is wanted in the household.  It includes anyone who has an obligation to pay a service provider for goods such as a cellphone contract, a DSTV subscription etc.

Every month credit providers and data providers (including telecommunication providers and insurers) upload information relating to any agreements that you may have with them, onto the records of the credit bureau. These records are then stored under your individual credit profile.

How does a credit profile affect me?
It is important for you to understand how a credit profile works, and to ensure that prior to applying for credit, you have a good credit profile, and if not, how you can improve a bad credit profile.

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