Procedures to consider when Applying for credit

NELSPRUIT, South Africa - April 4, 2016 - PRLog -- Credit providers will measure your creditworthiness and affordability, as well as the other factors, against their own policies and procedures to determine whether or not you qualify for credit.

Generally speaking credit providers make decisions about whether to grant credit, and the rates they will charge for the credit, based on a review of specific areas of your financial situation. Credit providers will normally consider the following criteria:

-       Are you able to pay back the credit?

-       Do you have anything to contribute, for example a deposit?

-       Do you have an asset to secure your loan?

-       Will you pay if you can? Do you repay your debts as agreed?

-       What does the economy look like? The worse the economic conditions are in the country, the tighter lending conditions become.

Some of the documents and information a credit provider may request to determine creditworthiness and affordability are outlined below.

Documents required to apply for credit  Documents required for credit assessment  Information required
·         South African ID or valid passport

·         Proof of address (FICA documents)

·         Marriage certificate or written spousal consent (if married in community of property)

·         Ownership (title deed / bond statement / rates and taxes account / copy of deed of sale / transfer documents)  ·         Latest 3 months' payslips, and/or

·         Latest 3 months' bank statements, and/or

·         Latest three documented proof of income, and/or

·         Latest financial statements for a self-employed consumer, and/or

·         An employment letter  ·         Personal information

·         Number of dependants

·         Employment details

·         Income, expenses and other committed obligations

·         Disclosure of sequestration, administration or debt review

To avoid any unwelcome surprises, it is important to get a copy of your free annual credit report before you apply for credit. You must check the credit report carefully for any errors or inconsistencies, and dispute these with the credit bureau.

Consumer rights in terms of applying for credit

The National Credit Act states that you have the right to:

-       apply for credit (not to get credit, because a credit provider has the right to decline it);

-       be protected against discrimination in the granting of credit;

-       be given reasons why credit was declined if requested;

-       receive documents, such as a pre-agreement statement and quotation or statements;

-       receive information in plain and understandable language.

The National Credit Act has specific guidelines for calculating affordability. You can visit the National Credit Regulator's website at www.ncr.org.za for more information on the prescribed cost of credit.

When applying for credit, the National Credit Act stipulates that the credit provider has the right to:

-       request permission to access your credit records from a credit bureau; and

-       decline credit, but must provide you with a reason why credit was declined if you request it.

Remember that a credit provider's assessment and decision to grant you credit are based on the information you provide in your application. This is then compared to information it receives from your credit profile. It is your responsibility to give all the information as fully and truthfully as possible, because if you do not, it may lead to you being over-indebted or your application being declined.

Being able to apply for credit, or qualifying for credit, does not mean you are ready to take it up. You need to be responsible enough to take up only what you can afford, and to pay your account regularly as per your agreement without being reminded. Getting credit before you are fully prepared can be disastrous for your credit profile or record, and can lead to over-indebtedness.

Information provided by BANKSETA