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Five myths about your credit profile

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In the realm of credit reports, misinformation abounds, and even well-intentioned advice from friends and family can lead you down the wrong path.

Contrary to popular opinion, your Credit Report influences more than just securing a bank loan; it can influence job opportunities and the interest rates on your loans.


Myth 1: checking your credit report is expensive and damages your credit score

Fact: According to the National Credit Act, you have the right to request a free credit report each year.

The action you can take: Checking your Credit Report is a quick and easy process that can provide valuable insights into your financial standing.

Myth 2: a negative credit profile is permanent

Fact: The National Credit Act (NCA) places limits on how long certain information can remain on your credit profile. For instance, adverse classifications of your payment behaviour, like ” “defaults,” can only stay on your record for one year. A court judgment against you can be listed for up to five years.

It’s essential to ensure that this information is updated correctly and that the time limits set by the NCA are observed by credit rating agencies. Note that different bureaus may maintain distinct records, and they do not share information.


Myth 3: all credit is bad; avoid it altogether

Fact: Managing credit accounts responsibly is key to achieving a good credit rating. Diversifying your credit portfolio with different types of credit, such as home loans, vehicle finance, and credit cards, demonstrates to lenders that you can responsibly handle various payment obligations. Having no credit means you lack a credit rating.

Action you can take: When taking out any credit agreement, carefully review the fine print and ensure you fully understand the terms. For instance, paying off your credit card balance within 55 days can help you avoid interest charges. Use credit facilities responsibly and only borrow what you can comfortably repay.


Myth 4: informing your bank about debt troubles will harm your credit

Fact: Defaulting on payments or neglecting them due to managing multiple debts poorly can negatively impact your credit profile.

Action you can take: As soon as you encounter difficulties repaying your debts, contact your credit provider. They can often help you develop a revised payment plan based on your financial situation.


Myth 5: potential employers can check your credit report freely

Fact: The National Credit Act mandates that potential employers must obtain your permission before conducting a credit check. Furthermore, credit checks are only permissible when the job involves handling cash or finances.

Action you can take: If you have a negative credit rating, there are steps you can take to improve it and change your status to a positive one.

Your credit rating has a substantial impact on your lifestyle, making it imperative to understand and manage it effectively.

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