Credit Score Q&A
MSP’s Client Services Manager, Marcus Crous, provides answers about the importance for prospective homeowners to maintain a healthy credit score. Before moving into his current position, Marcus was MSP’s Bond Originator.
Q: What is an ITC Score?
A: All the creditors from whom an individual person borrows money pitch in to compile an ITC score, which is better known as a credit score. This score is made up of the creditor’s payment behaviour and total debt exposure. It reflects an individual’s payment history over the past 48 months.
Q: Which credit bureau does MSP support?
A: MSP currently uses Experian to do our credit reports for our prospective buyers. South Africa has four credit bureaus, namely Experian, Transunion, Copuscan and XDS. Registered credit providers (such as banks who offer homeloans) have their own individual preference of which credit bureau company they utilise.
Q: What information is generally included in a credit report?
A: A credit report includes a consumer’s credit history compiled over the last 48 months. This includes his or her payment history and payment behaviour towards debt. It records overdue amounts, judgements, defaults and adverse records. The credit report lists every creditor the consumer ever borrowed money from and it includes the current balance or paid up date. The report also includes all known telephone numbers, employers and the last known address of the consumer. In addition, it includes the payment history on every open account with creditors. All this information is compiled and collated to form a consumer’s credit score. Information on the ITC or credit report may differ, as certain credit providers only uses certain credit bureaus.
Q: What happens if there is incorrect information on my credit report?
A: If you as the consumer is listed incorrectly or the information on your ITC is incorrect or outdated, you need to make contact with the credit bureau that shows the incorrect or outdated information and instruct them to rectify it. The credit bureau would request proof from the credit provider that the information they have recorded is incorrect.
Q: Where does the information on a credit report originate?
A: Every time a consumer borrows from a registered credit provider, it is the responsibility of the credit provider to update the credit bureau about the consumer’s payment behaviour. The credit provider has to update the credit bureau on a monthly basis. The consumer’s behaviour in terms of debt repayment is thus monitored and updated regularly. This ultimately results in the consumer’s credit score.
Q: How often do you recommend one should check one’s credit report?
A: It is always handy to know one’s credit score, as life can be very unpredictable and you might require funds urgently. Therefore, I would recommend that you check your credit report or score every three months. However, consumers can also choose to track and monitor their score on a monthly basis.
Q: Is there any way to improve one’s credit score?
A: The best advice I can give is to ensure prompt payment of accounts and installments. For instance, if you provided your credit provider with a certain repayment date, you need to repay your installment on or before that date. Ensure that your debt is manageable and affordable so that you can repay all your creditors as per your agreed repayment terms.
Q: Is it relevant for someone who applies for a homeloan to ensure the credit report for both the main applicant and his/her spouse is good?
A: Homeloan credit providers consider a variety of things when receiving an application. On the ITC report, the credit provider would look at the client’s score, payment behaviour and profile. Because a homeloan is a 20-year commitment and a risk for the credit provider, they need to ensure that the consumer’s behaviour is acceptable. Homeloan credit providers look at each client individually, inspecting their internal account conduct and external account conduct. If a consumer and spouse are applying for a homeloan together, it is of the utmost importance that both consumers’ credit reports are in order.
Q: What can a prospective homeloan applicant do to prepare his or her bank statements prior to applying for a homeloan?
A: Most people do not decide overnight that they are going to buy a home. This means they have time to get their affairs in order before they actually take the next step of buying a home. I would recommend that once the decision is made to purchase a new home, the consumer immediately starts preparing for the application.
The small things will make a difference to your credit score. Start by paying your credit providers on or before the recommended repayment date if you are not doing so already. Pay up and close down smaller accounts that are increasing your exposure to debt. Limit your expenditure and entertainment for a while and ensure that you have sufficient surplus funds left over in your bank account at the end of the month. Make sure that you do not have any unpaid items on your bank statements. If you work overtime or are paid commission, ensure that your payslips show these additional incomes for at least six consecutive months.
A good credit score helps you take back financial control. Make sure your affairs are in order before you apply for a homeloan. For more information, contact MSP.
Author: Multi Spectrum Property