what you will learn in this webinar
Justin Harrison (00:01)
And we are live. Just give everyone a chance to get on. I’m going to announce out to the page quickly.
David Bester (00:26)
I also need to send out the announcements.
Justin Harrison (00:34)
Okay. We’ve got out first viewers on. Good morning everyone. We will be going live shortly with the actual webinar. We’re just quickly sending out messages to all the Facebook groups, the WhatsApp groups, and just giving everyone a chance to get on. But thank you for joining us this morning. I hope you’ve got a cup of coffee; I hope you've got a pen and a notepad. We've got lots of really, really good info to share this morning.
David Bester (01:18)
While we’re waiting, please use the comments section to let us know who you are and where you’re from.
Justin Harrison (01:34)
Ja, the comments come through to us pretty quickly; there's a little bit of a delay. But please leave your comments, let us know exactly where you’re from; where in South Africa are you. Are you busy working at the moment, or are you still in lockdown? We'd love to hear from you. We’ve got 40 people live with us now; we will give it another two-three minutes, and we will go live with the webinar. So, let's just give a shout out to some people here – flash your comments on the screen:
Lehmarc Adams – “I am from Paarl”;
Octavia – “Good morning”;
Garth from Cape Town
Lawrence – “Good morning.”
Sean McDonald – “Good morning.”
Panorama in Cape Town – “Good morning.”
Pretoria – Mpho
Centurion – “Good morning.”
So, we’ve got people from all around the country on here this morning; Midrand.
David Bester (03:02)
Justin Harrison (03:04)
Even, Robertson, ja. Kuilsrivier, or as the English say, Kuils River - Kuilsrivier.
Good morning guys. We’re glad to have you on the call with us. We look forward to sharing lots of really, really good information with you.
Cheryl Pillay: “Good morning” – Don’t know where you’re from but let us know.
Sandton – Jerry: “Good morning.”
Johannesburg: “Currently at work.”
Francine from Sandton
Wayne from Midrand
Good morning guys. Really glad to have you on here.
Siyabonga from Durban: “Aweh! KwaZulu Natal” – it’s my home province. Ain't no place like Durban. Cheryl is from Sandton. Wayne – George. Midrand - lots of people from Midrand here, so really cool to see that we've got people from all around the country on here. We’re up to 80 people on the live stream.
“Good morning” – Takani from Killarney
Thando from Milnerton
Really glad to have you guys on here, even from Pretoria.
Justin Harrison (04:26)
So, just to give you guys a little bit of background before we get going. We have been in business for about seven years, providing consumers with credit reports, working with the consumers’ data, and improving their credit scores and personal financial situation. So, today’s webinar’s motivation is really to give people that “hacks” on how to improve your credit score very quickly. I think, especially right now, with COVID-19 and the whole coronavirus issue, people are looking at their financial situation to figure out how they can keep a clean record, but more importantly, once this lockdown is done, have access to finance; people are going to need to get back to business, people are going to need to get back to work. Our motivation here is to show you guys how you can very quickly start improving your credit scores. Without further ado, I will hand it over to Dawie and Dawie to take us through the presentations. If you've got any questions along the way, just drop them in the comments, and I will address these as we go along.
David Bester (05:44)
Yes, as Justin said, the purpose of this webinar is to go through a few quick hacks to improve your credit score. Increasing your credit score is a long-term journey; I want to make that very clear to everyone. There's a lot of things to keep in mind when you want to increase your credit score. There’s no quick fix to get an excellent credit score. However, there are a few quick hacks that you can use if you want to improve your credit score quickly. In that case, improve your credit score. That's the purpose of this webinar. So, just to quickly tell you the outline. The first part will be about using credit cards because that is one way to increase your credit score. The second part will be excellent information, which will be about handling your debt and how you need to address the creditors. I think a lot of people on here will probably find that very useful. Many people have a lot of debt, and they don't know how to deal with it, especially with the corona-thing we've got going at the moment. So, let's get started. We want to keep this quick and short; we don't want to make it too technical. There’s going to be a few terms that are going to be a little bit technical. If you don't understand, please just drop it in the questions; we'll try and address them as we go along. If there's anything that's not suitable for the current slide, we will just leave until the end; we’ll try and get to everyone's questions at the end of the webinar. So, let's get started.
I don't think I'm going to bore you now by telling you what a credit score is. I think everyone knows what a credit score is. The important thing to just mention in terms of credit score is to know in which range you fall under. So, credit scores have different ranges; it goes from very bad to an excellent credit score. And most of the people on this webinar want to know if they can apply for finance; when they can apply for finance. I think that's the purpose of you wanting to know your credit score. So, if you want to see your credit score range and what you fall into, you need to get your credit score, and you need to see what range you fall into. If you want, you can go to My Credit Status; you can check the different ranges. But I think we're going to do a separate webinar, sometime in the future, on that because there’s quite a lot of things to cover there. The purpose of this webinar is to chat about “7 things you can do right now to increase your credit score” quickly. So, let's get started.
The first thing: Pay off your credit card balances. So, if you've got a credit card, this is the quickest way to increase your credit score. When it comes to credit card balances, you need to keep in mind the credit score utilisation ratio. This sounds very complicated, but I'm going to make it very simple. Let's assume you've got a R10,000 balance on your credit card or a limit you can use. So, you've got the R10,000 debt that you can make. If you are using R1,000 of the R10,000 limit, you are using 10% of your credit score. Think about it this way; if I can make it easy, let's take pictures. You've got a bucket, and you can fill 10 litres of water in that bucket. If you fill that bucket with one litre, you're using 10% of the bucket’s capacity, right. It's the same with a credit card. If you're using 10% or 1,000 of a 10,000 limit, then you're using 10%. What you should currently use is less than 30%. If you use more than 30%, then your utilisation ratio will get penalised for it. Yes, when you use more than 30%, you get penalised. So, when you use more than 50%, you get penalised even more. And when you reach the maximum, you get penalised again. So, the aim is to use less than 30% of your credit utilisation ratio. Do not max out your credit cards and instead keep it below 30%. If you're using more than 30% at the moment, then pay off some of the balances; that will immediately increase your credit score. Some people estimate that you can improve it by 15 points or even more than that.
Justin Harrison (10:07)
Ja, I think an essential point to make is for people to understand why the credit scores and credit ratings work like this. What everybody needs to remember is that the banks and the institutions want to see responsible borrowing. As much as they are doing responsible lending and part of responsible lending is not utilising all the facilities given to you but rather to use a portion of that facility, and then show a history of keeping it at that limit and then consistently paying those amounts. The best way to think about this is if you were budget not to use your entire budget all upfront in the month; you want to, sort of, stage how you use it, and that's pretty much what the lenders want to see with people with credit cards and personal loans, etc. They want to see responsible borrowing. So, one of the ways to responsibly borrow is only to utilise up to 30% of the facilities available.
David Bester (11:18)
Yes, exactly. A creditor wants to see if you can handle your finances. If you've got the discipline to manage your finances and the most significant part of the credit score calculation is based on your credit history and your ability to pay off your accounts. So, that's also something to keep in mind.
Let's get to the second thing: It’s to increase your credit utilisation ratio. So, we’ve talked about credit utilisation, right? Now, let's assume that you don't have enough cash to immediately pay your balance and get that limit below 30%. What you can instantly do is, you can just increase your limit. I've done that in the past because I use a credit card on the sole basis to get points. I’ve got an FNB card, so I get a lot of eBucks points. What I did was I logged into my FNB profile, and I immediately just increased my credit score limit and now, I’m basically almost under 20%, just because of that simple act. You can; if you don't have the cash, just increase the limit.
Justin Harrison (12:20)
There's also another excellent tip that I can give. For example, on FNB, this is the case, and I know that ABSA clients have this option too. Your credit card will often have a portion that is allocated to straight and a portion of a limit allocated to budget. What you can usually do is you can, for example, move your budget amount down and increase your straight amount. Basically, you're not getting a credit limit increase per se, so you don't have to go through credit checks or anything; all you're doing is you're allocating more facility to your straight, rather than budget and then, it increases the 30% amount that you can spend every month. That's a good tip for people who want to go about increasing, per se, their limits without actually going through a limit increase.
David Bester (13:15)
Ja, that’s an excellent way of looking at it; an excellent tip. Let's get to the third one: Distribute the balances to different cards. Now, let's assume you don't have the cash to pay off the balances, and you cannot get your limit increased. If you’ve got more than one card, you can very quickly just distribute it between the cards. Let's say you've got a mortgage, and you've got extra money in the mortgage you can use; you can just distribute it between the accounts. You can allocate some money to the credit card that's got a higher 30% utilisation ratio and simply balance it out so that you have less than 30% that you're using. Don’t max anything out, but you can just distribute the amounts between them if you’ve got more than one account.
David Bester (14:08)
Fourth one: Use old cards now and again. Many people have got old cards that are just lying there, and they're not doing anything with it. Just use it from time to time - maybe once a month, perhaps once every four months. An old account gives you a lot of extra points when it comes to credit scores, and if they see that you can manage those accounts and use it every now and again, in a disciplined way, that counts in your favour as well. So, if you've got an old account that's just lying there, use it now and again. You will see your credit score increase as well. Like I said, as well, don't close your old accounts. Your old accounts count a lot, especially when it goes to about five years. Anything from two to five years counts in your favour a lot. Another thing with accounts is that your accounts’ age determines the first 15% of your score. That means that the credit bureaus take the age of your accounts into play when it comes to calculating your credit score, right? So, 15% of your overall credit score is calculated by age. You need to try and get as many accounts as you can, just lying there idle, but also you need to repay it up. An account that’s obtained a good age, but is not paid up, will be negative to you. But whatever you do - I think I need to just touch on this as well – do not open a new card to distribute the balances between your card. If you open up a new account, whether it be a home loan, it might be vehicle finance, it might be a new credit card, your score will go down if you open up a new account. Basically, what the credit bureau sees is, you're taking on more debt. They want to see now that you first have to prove yourself to them once you’ve taken on more debt. It can hurt your score for up to 36-months. We’re seeing some people; actually, their score decreases by 10 points by opening up a new account. Obviously, in the long-term, it works out a lot better. But for this webinar, the purpose is to talk about the quick ways to increase your credit score. So, whatever you do, do not open up a new credit card just to get extra points because it will have the opposite effect.
Justin Harrison (16:27)
Ja. Again, one crucial point to make here is to look at how lenders, for example, the banks, look at things. They want a consistent history, right? So, the longer you have paid accounts, the longer you have utilised within that 30% range limit, the more creditworthy you are. Now, if you had to think about this logically, if, on your profile, we suddenly see seven or eight new credit cards being opened or loan accounts or a whole bunch of finance being accessed, it's a red card. It's a signal that something is wrong; there's a signal that this person is applying for finance at many different places, a lot of new finance being taken on, and most importantly, a lot of new risks—a risk which has not had history yet. So, the idea is to balance your risk with history. It's very, very important. By all means, take on accounts but do it slowly, do it gradually, do it responsibly because that is precisely what the banks and lenders want to see.
David Bester (17:35)
Yes, exactly. Suppose you want to apply for vehicle finance or take out a home loan, or just apply for any kind of finance. In that case, the last thing you want to do is open up new accounts within six months before you apply for finance because it's most probably going to hurt your score, and you don't want that. So, if you’re going to open up accounts, do it for the long-term. If you wish to apply for a home loan next year or vehicle finance next year, by all means, take out a new credit card or open up a new account, whatever it might be. But also, as Justin said, you need to do it responsibly. If you're going to be missing payments, then it will hurt your score even more, and you're going to be in a worse position than you are now.
This one might seem pretty obvious to some, but it's scary how many people don't use this. Now, every single day, you're bombarded by emails, right? We get bills via email. It's very easy for an account to get lost within email boxes, and 35% of your credit score is calculated by your credit history of repaying debts. So, it's safe to say that the most significant part of your calculation is how you repay your debt. Even one missed payment can result in almost 100 points that get deducted from your credit score. Whatever you do, the last thing you want to do is miss a payment with your creditors because it'll immediately decrease your credit score. As I said, it's pretty obvious, but this is one of the hacks that most people use to settle their payments and to avoid missing those payments. Everyone's got this function; all the banks have got the process. You can just log into any online banking profile. If you don't have online banking, you can simply contact your bank or just go into the bank but automatically set up your payments. What I do is I've got a few accounts that I need to pay, and I just do it automatically, then I don't have to log in. Nothing has to remind me about the accounts; it wastes time, and it's just a shlep. So, even with my credit card, I've got a function on my online banking, where at the end of the month, my cheque account just pays off my credit card, then I don’t have to worry about it. It's done automatically. It's a very productive hack, and it keeps you on top of all your payments.
Justin Harrison (19:57)
Dawie, we’ve got two questions here; I’d just like to deal with quickly:
The first is from Lawrence. Perhaps you can answer, so I’ll put it up on the screen. “Does my score affect my spouse's score?”
David Bester (20:12)
Only if you're married in community of property, then it will. If you are married [inaudible] Pardon?
Justin Harrison (20:20)
And if you share joint accounts.
David Bester (20:21)
Yes, if you share a joint account. Let's assume that you signed surety on her account; yes, then it's going to affect it. But, if you didn’t sign surety, you don't have a joint account, and you're married outside of community of property, then it won’t hurt your spouse’s score at all.
Justin Harrison (20:40)
The best way to answer this is probably also for people to understand that ‘score’ is basically ‘risk assessment’. When leaders look at you, they're looking at your risk; they're doing a risk assessment. Think about how you’re exposed to risk. If you’re married in community of property, there's a risk between you and your spouse; if you share banking accounts, there's a risk between you and your spouse. Anywhere where there’s shared risk, it will have an impact on you. Anywhere where there's no shared risk, it won't affect you.
And then the second question, somebody asked about debt review. We'll talk about that, probably at the end of the webinar. I just want to put this question up quickly, from France: “How long does a debt stay on your credit record. I’ve got debts showing in my report that I still owe but took out in 2011. At some point, they were gone from my accounts but now showing again?”
David Bester (21:37)
Yes. Look, it all depends on what debt it is. A default listing can stay up to two-years; judgments can stay up to five-years; so, you'll need to check. But 2011 is a pretty long time. I think you need to investigate that and get it removed. We will cover this and the next slide as well.
Justin Harrison (21:58)
I just want to make one more point quickly? I think something about automatic payments is important because I’ve tested this out on several occasions. So, I am not a fan of debit orders in particular; you don't control anything. I tried to either put a stop order, which is a debit order controlled from our side. Alternatively, what I do is set up an automatic EFT every month if I can. So, certain places, like insurance, you can't do; they force you to sign a debit order. Like medical aid, forces you to sign a debit order, but for example, things like school fees; what I do is I never sign debit orders. What I do is I set up an automatic payment, and I try and pay three to four days before the due date. So, if the due date is the end of the month, I usually set up my automatic payment for the 26th or so. And what I found is, early payments definitely have an effect on your credit score. Because not everyone has the option of doing this, but a lot of companies actually report you as a good payer. In most instances, people are reporting if you're a lousy payer, but many institutions do report advanced payments (payments that are ahead). And that has a significant impact on your score. So, definitely, get into the habit of trying to pay your accounts just a few days before they are due, rather than on the due date. Another mistake that people make is that they’ll pay on the due date, but the institution they’re paying might be with a different bank, and so, the payment only reaches there two or three days later, in many instances. And what happens is that it shows up as a late payment on your profile. So, make very sure you try and set your dates up early enough, so it clears in the institution's bank account on or before the due date.
David Bester (23:45)
Yes, something you touched on now that is very important to discuss is the credit report data or consumer data. Contrary to what you believe, everyone believes that the credit bureau owns the data, right? Which is actually untrue. The creditor owns the data. If the creditor sent a notification to the credit bureau that you are late on the payment, then the credit bureau will report it. If the credit bureaus sent a notification that you're on time and a good buyer, they would report it. If the creditor doesn't send anything, nothing's going to happen. So, what we find is some people are good payers, and they pay their accounts to certain institutions, but it doesn't even get logged. But that's only because the creditor doesn't send the data to the credit bureau. So, the credit bureau doesn't own that data; the creditor does, and once you understand this, it will give you a lot of power in negotiating and getting certain late payments removed. A creditor can remove a late payment, if they want, from the credit bureau; the credit bureau doesn't have to do it. But the credit bureau posts what the creditor gives them.
Justin Harrison (24:54)
David Bester (24:58)
Okay. So, let's get to this part. I think many people - I can see by the comments – they obviously want to know. When it comes to disputing errors, 80% of the people have errors on their reports; this is according to certain news sources; 25% of these are harmful. That means that 80% of the people on this webinar might have certain errors on there, which is actually a horrifying fact. You would think that a credit bureau should have accurate, up to date information, yet it's the complete opposite. When you get your credit report, you need to look at addresses; you need to look at names, look at telephone numbers, and look at accounts. Anything that is wrong, you need to dispute with the credit bureaus. And something I need to add there as well is only dispute one item at a time. Let's assume you get your credit report, and you see a bunch of different things on there; that’s wrong. A lot of different addresses, names, phone numbers, and you start addressing all these with the credit bureau; they're just going to see you as someone that's trying to game the system. So, try only to dispute one error at a time, and not everything at once.
Justin Harrison (26:11)
Also, if you can just make a crucial point there, Dawie, in terms of dispute resolutions. What’s important for people to understand is that there are several credit bureaus in the country, eight? And the credit bureaus are, as you said, custodians of the data. So, what happens is lenders will go on and list you for adverse payments; they will list your payment history. Many of the institutions, like Telkom, etc., are automatically linked into the bureaus, and as you make payments, the system updates your payment history. But the bureau's themselves are not the ones responsible for the mistakes. The mistakes come in from the people that you have accounts with. When you log a dispute – you’re logging that dispute with the bureau - the bureau will then investigate with the creditor and then decide on that. People need to know that if a creditor does not come back within 60-days and provide confirmation that yes, it should be changed, the listing or removed or altered in some way. By default, the bureaus have to listen to the consumer.
David Bester (27:28)
Yes. It's crucial to remember that the bureaus have 20-days to respond to you when you dispute something. If the bureaus don’t respond to you within 20-days, then you can go to the NCR, and you can lay a complaint against the credit bureaus. Believe me; the credit bureaus are very scared of the NCA because they can take away their licenses if they don't comply. That’s something that you need to remember, and that’s something you need to use. Like I said, about 80% of people have errors on their reports, and once you dispute something, the bureaus have to come back to you, and they have to give a reason. Now, let’s assume the credit bureau actually does come back to you. They say, No, that's actually correct, and you are in the wrong. What you can do is, you can dispute it again because if they don’t have legal claims or a way to prove it, then you can dispute it again if you strongly believe that you are right. Here’s something that you also remember: you can ask the credit bureau for proof. If the credit bureau doesn't give you the proof, let’s say, an account at RCS, let’s say, you don't own that account, you can tell them, “Listen here, I see that account from RCS on my credit report. However, this is not my account. I want you to give me proof that this is my account, and if you cannot, then you need to remove it. If the credit bureau comes back and if they don't give you the proof, then legally, they actually have to remove it from your credit report [inaudible] Here’s something that you also need to remember when you're disputing errors on your credit report: you have to stay organised. Let's assume you send a dispute today to a credit bureau. You need to log the communication with the credit bureau. If you eventually want to go to the NCR, you have to give them proof; you have to tell them, “Listen here, on 6th May, I sent the dispute to Experian or TransUnion (or whoever it might be); on the 10th of June, I contacted them again. They didn't respond to me, and I’m now coming to you as the NCR to take the matter up with a credit bureau. If you cannot give them the proof, the then whole issue is useless. I've taken an example of an account with the wrong addresses. If we look at this, there’s a bunch of addresses on this example, right? This is actually an example from one of our credit reports, and it's something that we disputed with a credit bureau. And as you'll see here, the bottom part isn't even a residential address; it's a P.O. Box address. Then, the part in yellow or green, four addresses, which is actually just the same address, but as you can see, they are slightly different. They are somewhat different because different creditors are actually sending that data to the credit bureau. As I’ve explained previously, the credit bureau will only show or log the details that are actually just given to them. They don’t verify that the details are correct. So, that's on you to check your credit report regularly to make sure that your details are correct. You'll see on this one, there are 1-2-3-4-5 issues just with addresses alone, and I'm sure if you look at your own credit report, you will see something similar as well. Something that's very interesting or very helpful with our reports is we are actually the only ones in the country that offers an online, automatic dispute generator. So, with our membership options on My Credit Status, we’ve actually made it very, very easy for people to log a dispute. You can go into your accounts; you click one button. You will see the screen that you see in front of you; you just get the details. And, basically, this thing spits out a legal letter – a legal dispute letter - that you can simply send off to the credit bureaus. As far as I know, my Credit Status is the only company in South Africa that offers clients this service.
Justin Harrison (31:29)
One important thing to mention is that people are probably trying to figure out how My Credit Status fits into the picture. Typically, you have your top tier credit bureaus like TransUnion and Experian. And by the way, all of these bureaus have to share information; it’s a legal obligation by the National Credit Regulator that all bureaus have to share information. So, if there's a listing on Experian, it will eventually show up on TransUnion; you're pretty much getting the same data. The timing might be slightly different because of the time it takes to get data between the two institutions, but typically, you should, more or less, have the same information because they work on a reciprocity model, where basically, they have to share data. My Credit Status comes in, and we’re slightly different because we’re very consumer-focused. Experian, and the likes of TransUnion, typically deal with institutions, so they deal with the retail accounts, the banks, etc. We are 100% focused on the consumer report side of things and then basically helping consumers correct the errors in their reports. With your typical credit bureau, it's not really in their interest to get a whole lot of disputes coming at them because it occupies their administrative process. What we've done is we get that data, we present it in a way that is absolutely logical and simple to everybody because if you've got a report from a credit bureau before, about 80% of people can't really understand the listings on there; it’s very technical. We've simplified it, we've given tips, advice, and then as Dawie was saying, we’re put a dispute generator in place on our platform and amongst many other things that we've got to help consumers, but it enables you to list, an adverse listing, a problem on your report directly through our system, which is one of the critical factors of our system.
David Bester (33:26)
Yes. Justin, there’s a very interesting comment here that I think we need to discuss. “How do lenders choose which credit bureaus to use?” – that was from Lawrence. So, Lawrence, lenders actually use whoever they want to use. There are no set rules; there’s nothing that says that they need to use X-Y or Z. In many cases, it's affordability. If Experian gives a lender a better deal, they’ll go with Experian.
Justin Harrison (33:53)
[inaudible] Just to make the point is, as I said earlier, the data shared between the bureaus. It actually is immaterial which bureau they use. Ultimately, if a listing is added to Experian, it will eventually show up on TransUnion. If it is removed from TransUnion, it will eventually be removed from Experian because the data is shared. The only thing is the timeline. For example, it may be a month because of the data being moved across.
David Bester (34:20)
Correct. It is also worthy to note here that every credit bureau has a different credit score; different algorithms are used. Experian doesn’t share their algorithms with TransUnion, and TransUnion doesn’t share them with XDS. But that's nothing to worry about. What I would say is, just look at your credit score range. If you've got an average credit score from Experian, then you’re most likely going to have an average credit score or fall into an average credit score range on TransUnion as well. And that's what you need to aim at, and, ultimately, that's also what the lender looks at. He doesn't really look at its score; he looks at what range you fall into. A better way to explain this is, what risk class do you fall into? Are you a more significant risk to the creditor, or are you a lower risk creditor?
Justin Harrison (35:11)
Yeah. Dawie, just to let you know, we’re 35 minutes into the webinar, so let's try and push ahead and keep some time available for questions at the end because there are a lot of questions here.
David Bester (35:22)
Yes. Okay, we’re going to go to the last slide for now, which is the creditors part. So, negotiate with your creditors. I think that's the thing that most of you have issues with? We're going to discuss it quickly. I think if there’s enough demand, then we'll do another webinar as well, just on this point alone because this is an incredible amount of information that you can share on this, or when it comes to negotiating with creditors. Adverse records or adverse listings, as well, can count up to 100 points. I’ve touched on this already on the previous slides, but a late payment can severely damage your credit score, so you need to negotiate with your creditors. If you cannot repay your debt, go to your creditors. Be sincere with them, tell them that you need to, you want to, settle your debt, but they need to meet you halfway. You have obviously fallen into difficult financial trouble, or you've got financial difficulties at the moment, which is pretty general at the moment, seeing that we are in the COVID era at the moment. A lot of the creditors will actually negotiate with you. Ask them for reduced settlements. You obviously can’t ask them just to write off the debt, but you'll be surprised at how many of them will actually accommodate you. It's crucial to realise that they will instead settle the amount or come to a settlement plan with you, then resulting in you defaulting on your payments entirely because they’ll instead take something off than nothing, then getting nothing.
Justin Harrison (36:48)
When you go to a debt counsellor and put yourself under debt administration, it’s essential to notice. What they essentially do, is to exactly what we’re telling you to do here. They go and negotiate with your creditors on your behalf. And the thing is, most people are too shy to do it, people are too scared to do it, people feel bad because they've fallen behind that they owe money. One of the most important points we can make here is that it's better to make a part payment than to make no payment because it keeps up your payment history. One thing that's not accurately reflected in the reports at the stage is how much you’ve paid. The most important thing is that you paid. So, rather pay R1 than nothing because it's going to show up on your history.
David Bester (37:32)
Yes, exactly. If you approach negotiating with creditors, a very cool hack that you can do – which very few people are actually doing - is you can add a contingency in there. Ask them, tell them, “Listen here, I’m prepared to pay off - if you can afford it - 90% of my account, but I want you to remove the listing from the credit bureau”. A lot of the times, the lender or creditor can be difficult. They’ll come back and tell you, no. But it's a negotiation; you just need to negotiate with them. If they say no, then ask them for reduced settlements. With a reduced settlement, ask them to include “PAID, AS AGREED” on there. When you’ve got that letter, and you settle the debt. Let's say you settle the debt of 10,000; you’ve agreed with the creditor to pay 5000 to settle the account. When they send you the settlement letter, ask them to put on the settlement letter: “PAID, AS AGREED”. What this does is shows that you’ve settled your debt, and that's what the credit bureau wants to see. The credit bureau doesn't what the settlement amount was, and it doesn't matter to them. What matters to them is that you settled your debt. When you get the settlement agreement, and it says, “PAID, AS AGREED”, take the settlement agreement, and you need to dispute it with the credit bureaus. You can tell them, “Listen here, the creditor and I came to an agreement; we agreed to settle the debt and here’s the settlement letter. You can see that the creditor did say, “PAID AS AGREED”, and I'm asking you to please remove it from my listing.
Justin Harrison (38:59)
I think something that's also very important to make a note of here is that - this is saying we often say in financial management – “nobody's going to look after your money, better than you; nobody's going to look after your money, other than you”, right? The same thing comes with your credit profile. People are going out there; they may be lending responsibly, they may be paying responsibly, but they're not actively managing their credit profiles, which is a very negative thing, long-term. It means that you're going to pay higher interest rates if you don't have a better score. It means that you’ll have access to not as good finance deals, not as much financing, etc. So, there are many spin-offs, and I think even the most diligent payers amongst us don't manage their credit profiles well enough. This is something you have to do. Don't rely on the bureau to do it; don't depend on us to do it; don’t rely on anybody else to do it. What you need to do is you need to make a consistent effort to check your credit report, at least, every month, and go and have a look at your credit, not just your score because score is one thing; you've got to understand what's happening in your reports. Look at your report, find out where the problems are and go and have those things corrected. If it’s an incorrect address, incorrect telephone number, if you’ve made a payment and it’s not showing, go and dispute these things, chat to your creditors. Make sure that when you pay up, as Dawie said, it's “PAID AS AGREED”; you get a letter. Don't just pay something off and leave it because chances are; it’s going to bite you in the backside a year down the line because maybe, you paid as agreed, and that business went out of business entirely, and they’re no longer there to fix that listing. It’s really, really important to make sure that you handle your accounts and lend responsibly, manage responsibly and keep documents of everything.
David Bester (40:48)
Yes. Here’s an example as well of a payment account – this fall underpayment profile, right? Which is about 35% of your history. What you'll see here is, I noted that 150+ is definitely what you don't want to see. If you’ve got something like that, your score will probably reduce close to about 100 points. You need to avoid that. What you want to see is the “OK” sign. So, I highly suggest you go to get your credit report, look at this part specifically, and fix this issue. The way you fix this is with the dispute section we talked about and negotiating with your creditors. So, that's a summary, just to recap quickly.
Number 1 is: Pay off your credit card balances;
Number 2 is: Increase your credit utilisation ratio;
Number 3 is: Distribute balances to different cards;
Number 4 is: Use old cards every now and again (don’t close them);
Number 5 is: Set up automatic payments;
Number 6 is: Dispute errors on your credit report; and
Number 7 is: Negotiate with your creditors.
Justin Harrison (41:59)
Ja, I think that's excellent advice and, as I say, you can go and get a report directly from the bureaus, but it's been our experience that they’re over-technical, very complicated. And then also, the dispute process isn’t really encouraged. So, my suggestion is, go to MyCreditStatus.co.za, certainly consider one of our monthly subscription plans. The monthly subscription plan gives you access to a report every single month, on top of which, it gives you a host of tools to improve your score, to manage your money and really educate you around something that’s going to become a very, very, very big issue in the future. If you have a look at your credit profile now, take a look at what's happening in first world countries and even developing economies, like China, your credit score is now starting to count towards what they call your ‘social citizens score’, and your social citizens score is basically a reflection of how well you behave yourself, as a citizen. It includes things like the amount of alcohol you buy, the amount of cigarettes you buy and very much how you manage your money. So, I think we are not far off having a social citizen score in Africa. For this reason, I’m encouraging people to manage their personal finances by looking at their credit profiles every month and doing something every single month to improve it. On top of which - another point that I want to make very quickly - is that what Dawie’s gone through here is by no means the be-all-and-end-all of it. There's a lot of stuff to go into. It takes a lot of time and effort to move your scores in the right direction. These are the quickest things we could give you that you can do today to start improving your score, and indeed, in future webinars, we'll be covering some more advanced stuff.
David Bester (43:42)
Yes. I think something to mention as well, that we've been getting a lot of people asking the question, “Why aren't your credit scores free?” Well, My Credit Status is an NCR licensed credit bureau reseller, which means that we have to pay Experian actually to get the consumer data from them. I know it’s not fair, but that's just the way it works; that's how the credit bureaus make money, and they obviously need to make money as well. Another thing as well is we don't use your personal information to sell you offers. If you log into My Credit Status, you will not see any offers; we will not make any offers to you. Some of the other platforms out there that provide free scores do make offers; they use your personal credit information to qualify you against certain offers, which is not the best offers. We've seen offers like a 27% interest rate, which is absolute financial suicide. So, we don't do that. Also, we offer a lot of exclusive tools, like the dispute generator that you've seen now.
Justin Harrison (44:52)
A very extensive video library, lots of excellent educational tools, and something else that Dawie touched on, which is really critical - there are companies where you can go and get a free score. Still, very often, the data is not very accurate. The other thing is that the free platforms have basically got to be funded somehow, and the way they fund themselves is by promoting offers. We believed that it's unethical to put people into more debt, promote irresponsible lending, and promote reckless borrowing. So, we are a paid platform because we have no affiliation with anyone, and we are 100% focused on helping consumers improve their score. In the last seven years, we've helped over 300,000 people with their scores and their profiles. That speaks volumes for our platform, and every single month, it just keeps improving. Even the NCR said that My Credit Status is probably one of the ideal models because it is very consumer-centric. So, that is one of the key reasons to use our platform. Dawie, if I can just go through some of the questions? Guys, if you've got questions, we've got about five or six minutes. I’ll put a couple of them up on the screen.
David Bester 46:15
Can I ask you to put the email address on the screen quickly because I see this quite a few comments coming in from people who say they can’t log into the platform on My Credit Status? Guys, please email us, our support team will get back to you, and we can solve it there. Alternatively, you can just go to the login page; you can click this ‘forgot password link, then you can just reset your password. [inaudible]
Justin Harrison (46:42)
Something to remember is if you are on our system, and you haven't logged in for a period of time - I think it's about 14 days or so - and you're not on a paid plan, then chances are, we will have purged your account, so, you’ll have to sign up again. Part of our regulations with the National Credit Regulator is that we are custodians of data; we do not own the data. So, basically, whatever's on your profile belongs 100% to you; we can't see it; it’s 100% secure and private. We have many stringent security protocols in place to make sure that nobody can access your data, including us. And when you generate a report, it's only available for 72 hours on our platform. You can download it, you can have a look at it, but we do not store your data. We do not store your data.
So, let’s just get to a couple of questions here. There’s a question here from Colin: “How to deal with companies that are making illegal inquiries in my profile, without my ‘consent’ - I'm assuming – they made about 15 inquiries in six months, from the same company?”
David Bester (47:51)
Okay. That's an excellent question. What you can do is, you can contact the credit bureau and ask them to remove it from your profile, or you can ask them to give you proof. If they cannot provide you with proof that you made the inquiry or that authorised inquiry, they have to remove it legally. So, what I would do is I would go to the credit bureau, I’d ask them for proof of the inquiries, and if they cannot give you evidence, it will be deleted.
Justin Harrison (48:15)
Okay, the next question is from Kabelo, and Kabelo asks: “Generally, how long does it take for credit score change if a consumer makes changes to their debt, like settling, etc.?” - according to the recommendations we made, I'm assuming.
David Bester (48:30)
Yes, so that can take up to 60 days because, let's say, you pay your creditor. Next month, your creditor is only going to check and validate that you made the payment. And then, from creditor to creditor, it might differ, but they need to report to the credit bureau. It all depends; it doesn't happen instantly. You need to keep that in mind, but it can take up to 60 days.
Justin Harrison (48:55)
And the idea is to sit on the credits. The next question is from Marius: “What is the cost involved if MCS assist a client with the correction of credit bureau data – or the cost for the initial MCS credit report?”
David Bester (49:21)
Okay, so, we've got three different plans: We've got a ‘Score Only’ and we've got a ‘Full Credit Report’ and we've got the ‘Membership Option’. The ‘Score Only’ is for people that want to apply for finance and just see what credit range they fall into - high risk, average, or good risk (they have an excellent credit score). That's the Score Only. The ‘Full Credit Report’ is for people that want to see if they blacklisted; they want to see if they've got the wrong information on their report. It’s basically a full profile like a credit report. Then we've got the ‘Membership Option’. The ‘Membership Option’ is actually cheaper than the ‘Full Credit Report’. You guys are welcome to head over to My Credit Status; on the homepage, there is a link that shows the pricing and all of these. With a ‘Membership Option’, you will get the full credit report, and you will get a budget tool that you can use to set up a budget. That's very important if you want to negotiate with creditors because you want to show them that you want to commit to paying your repayment debt. You need to show them a budget as well; it will count in your favour. You’ve also got financial assistance, which is a 24-hour helpline. If you’ve got any financial questions, you can phone the hotline, and you’ll get an expert to help you. You've got the dispute generator that we've talked about as well. And then, you've got a course called “20 Secrets to Improve Your Credit Score”, which is a video course outlining 20 ways for you to improve your credit score. You also get access to a book full of legal templates, showing you how to deal with judgments and listings. It's full of legal templates that you can use. [inaudible]
Justin Harrison (50:51)
[inaudible] …And there’s new info being added every single month. If I can just address this question by Chrystal Palmer? “So, are you saying if I have more than one address and telephone number on my profile, it counts negatively on my report?”
David Bester (51:06)
Yes. What happens is, if you've got a lot of addresses on your credit report, then you are being seen as a person that isn't very stable. They see you as a person who often moves around, and being a person that isn't very stable, usually counts as a person who’s got a bad credit report. Funnily enough, very few people know that, but that's why you need fewer addresses on your credit report, and you'll see on your credit report, most likely, you've got quite a few duplicate addresses on there.
Justin Harrison (51:36)
Okay, so this is an excellent question from Samantha: “Will becoming a paid member with My Credit Status not affect my credit status because it will appear as a new account?”
David Bester (51:51)
No. So, My Credit Status is not an account. An account is only for creditors when you approach creditors when you loan money from people. So, My Credit Status, actually, when you check your credit status, it doesn't even show up on your credit report that you checked your status. Whenever someone inquires your name, or you make an inquiry - let's say you want to apply for a loan or whatever - then that gets docked on your credit report. Most of the time, you can do many of these in a short span, then it will count negatively towards your credit report. However, because we are consumer-focused and try and help people, we have negotiated with the credit bureaus. If you log into your account and check your credit report on My Credit Status, it won't even show up on your credit report. That's only for you to see and for your own personal use.
Justin Harrison (52:43)
Okay, let’s take the last five questions. If you've got any questions, now's the time to slide them in quickly; we'll address the last five questions. We're about seven minutes over, so we'll quickly take the last five questions. If you've got any questions that haven't been answered, please put them in the comments section, and we will address them. There's a lot of questions coming through about the memberships and monthly payments. As we said, we really don't want to focus on selling. We're here to give you guys as much information as we can, absolutely free of charge. If you are interested in My Credit Status and the services we offer, please just go to MyCreditStatus.co.za. We really want to focus on giving you guys information rather than sitting here, selling. So, if you've got questions, you can go to email@example.com. Alternatively, just go directly to the site: MyCreditStatus.co.za, and we do have a Facebook bot, which you can interact with and ask all your questions to. So, let's just take the last few questions. This one comes from Tursuis (I hope I said that right): “How to improve my credit score with only having a bond?”
David Bester (54:03)
Yes. There’s a lot of things to keep in mind when it comes to credit scores. No person is the same. If you only have a bond, then what you can do is make sure you always make your bond payments. Also, because you have a bond, it’ll also count positively. It will be favourable to your credit score in the long term. Apart from that, I would say just stick to making your payments. Don't take out unnecessary debt. If it's not necessary, especially now with COVID, taking on new debt, like I said, can actually decrease your score but [inaudible]
Justin Harrison (54:42)
And pay a little bit extra every month. It definitely has an effect. Pay a little extra every month.
David Bester (54:48)
Always pay on time; never be late in your payments. And as Justin said, pay a little bit extra every month; not only will it decrease your interest payments in the long term, it’ll also be beneficial to your credit score.
Justin Harrison (55:00)
And it decreases the risk for the lender, which means that you're a responsible borrower. The next question is: “What is a good credit score for a bond?” - and that comes from Sibonelo.
David Bester (55:19)
Yes. A bond can be anything, about 600 points plus, but that also differs from one person to another. It all depends on your relationship with the banks and your history when it comes to paying your accounts but yeah, I would say about 600+.
Justin Harrison (55:42)
Okay. We’ll take the last two questions here. Smomza says: “Logging on to credit bureaus is troubleshooting” - I'm assuming she means troublesome – “especially if you have forgotten your past email addresses” – Dawie, I'll take this one quickly. Again, I think this is the benefit of MyCreditStatus.co.za. One home, one place to check all your stuff. You don't have to worry about multiple places, multiple bureaus. You can just come through directly to us, and you've got one login, and besides that, you get a lot of value-adds, so, definitely, the way to go. And then, let’s choose one last question to deal with. This is a good question. Dawie, you can take this. This one comes from Lawrence: “Why does insurance payments appear on the credit bureaus since I'm not borrowing money?”
David Bester (56:36)
Well, insurance providers are financial service providers, and as I said earlier, anyone can report data to the credit bureau. The insurance companies, in general, usually report to the credit bureau. I would actually see that as a good thing because if you make your insurance payments and are on time, it obviously counts in your favour. But yes, as I said, anyone can report or can send that data to the credit bureaus. It's not that only loan companies can do it, which is actually a good thing because otherwise, you will never get awarded for good payments, right?
Justin Harrison (57:13)
Absolutely. All right, guys, that's pretty much all we got time for this morning. We really, really thank you for your time. We are super glad to be helping fellow South Africans with their credit scores. I think what we're doing is really ground-breaking. Up until now, nobody has really been consumer-centric and focused on the consumer side of things. It’s, sort of, just been, your listing is with the bureaus; your creditor listed you, and you didn't quite know how to deals with things. Our mission at MyCreditStatus.co.za is really to help you improve your score. Our mission is to help educate you. Our mission is to really promote responsible lending, responsible borrowing and really allow people to know what's going on in their credit profiles. I cannot stress this highly enough. If you simply leave your credit profile and don't check it, you’re opening yourself to all sorts of problems. You don't know when people are checking your listings; you don't know who's checking in on you; you don’t know if there’s possible identity theft happening. So, for these reasons and many more, I would say, a R59 a month subscription to get your report every month, as well as a host of educational tools, etc. is actually a small price to pay in the long term, because really, it's about making sure you manage your profile. So, thanks so much, guys; we really appreciate your time. From my side, we look forward to hosting the next webinar reasonably soon. Dawie will be in contact via email and the WhatsApp groups; please stay subscribed. Please, please tell your friends, tell your family about MyCreditStatus.co.za; tell them about the webinars. Let’s get people together; let’s educate people. It's time in South Africa that we start looking after each other, and this is our mission at MyCreditStatus.co.za.
David Bester (59:06)
Yes. If there's one thing I want to add, please. I know that the information might be very overwhelming. Some of the terms are not well known by many of you, especially people who are new to the credit report industry. We try and make it as simple as possible, but please look back at the webinar; we’re going to leave the video on YouTube. Please subscribe to our channel. We're going to be doing these every second week going forward. There's going to be a lot of free information that we're going to be giving away. This is just a first taste of what is to come. Please remember to subscribe to the channel. We're also going to be sending, to everyone who didn't get their answers answered by us - many questions popped up during the course of this webinar. So, what we’re going to do is, we're going to send out a questionnaire on the WhatsApp group. Please take three minutes of your time to answer the questions and put your personal questions on there, and then, in the following webinars, we will get to them and discuss them.
Justin Harrison (60:10)
Cool. Hamba kahle; sala kahle. See you guys next time.
[60:19 AUDIO ENDS]