CREDIT BUREAU COVID19 STATEMENT
Credit bureaus are receiving numerous queries from consumers, suppliers, clients and the public at large in relation to how a “COVID19 payment holiday” will be reflected on a consumer’s credit bureau record and whether a payment holiday or an agreement for extended payment terms, will negatively impact a consumer’s credit record or credit score.
Credit providers and credit bureaus are working together, under the auspices of the South African Credit and Risk Reporting Association to ensure that any “COVID19 payment holidays” granted are correctly reflected on the credit bureau and that consumer profiles are not unduly negatively affected.
In the first instance, we recommend that you check whether your loan is covered by credit life insurance which may cover the repayments of your loan for up to 12 months in the event you are retrenched or unable to earn an income. If your loan is covered by credit life insurance, your bureau credit profile will not be affected in any manner as the loan amount will be credited monthly by your credit provider.
In the event that your loan is not covered by credit life insurance, you may apply to your credit provider for a payment holiday or request extended payment terms in relation to your loans. When granted, these are displayed differently on your credit bureau record: a) A “Payment Holiday” refers to the instance where the next instalment due has been postponed to a future date, but the number of instalments expected to settle the outstanding balance, remains unchanged. In other words, the loan will now be repaid over an extended period; b) “Extended Terms” refers to where a consumer and credit provider agree to vary the repayment terms so that the number of instalments increases. Specifically, the next instalment date remains unchanged, but the instalment amounts are reduced and the number of instalments to be paid are increased. The Credit Industry have issued a Data Submission Guideline that clarifies how these should be submitted to the bureaus.
Credit bureaus have conducted an impact analysis on the variables that make up score cards and affect consumer scores. We have found, provided that credit providers correctly submit data to the credit bureaus for any payment holidays/extended terms provided in terms of COVID-19, as set out in the Data Submission Guideline, consumer credit scores should not be impacted. We do, however, expect scores to deteriorate over time as the economy takes strain and further consumer default positions emerge.
We wish all consumers health and wellness during this time of lockdown. We encourage consumers to contact their credit providers to obtain relief in the instance that they are not able to meet their agreed payments. When doing so, remember to check the terms and conditions of any arrangements for financial relief granted, including any additional costs/charges that may be levied.
We urge consumers to check their credit records by obtaining a free credit report from any of the five bureaus listed below during this lockdown period.