Navigating your financial landscape
Credit bureau reports and scores
In the ever-evolving world of personal finance, understanding your credit bureau report is vital to making informed financial decisions. Your credit bureau report is a snapshot of your credit history, and it plays a crucial role in shaping your financial future.It is important to investigate the intricacies of credit bureau reports, exploring what they are, where to find them, the factors that influence your credit score, and actionable steps to improve your score.
A credit report is a detailed record of your credit history compiled by credit reporting institutions called Credit Bureaus. These reports contain information about your credit accounts, payment history, outstanding balances, and other relevant financial activities, such as adverse classification of customer behaviour and enforcement action initiated by credit providers. Adverse classifications of consumer behaviour include classifications such as delinquent, slow paying, absconded or not contactable which may remain on your credit report for one to two years.
Adverse classifications of enforcement action where action was taken by a credit provider include being handed over for collection or recovery, legal action, write-off or judgment which may remain on your credit report between two to five years.
Credit reporting institutions, such as TransUnion and Credit Info, as registered under the Credit Bureau Regulations: Bank of Namibia Act, 1997 collect and maintain customers’ credit information, providing lenders with a detailed overview of your creditworthiness when you apply for credit.
Locating your credit report
Accessing your credit report is a fundamental step in taking control of your financial health. As per section 23(1)(c) and (d) of the Credit Bureau Regulations: Bank of Namibia Act, 1997, individuals are entitled to a free annual credit report from a credit bureau and may challenge information contained in the credit report. You can obtain your report by visiting the websites of the two registered credit bureaus in Namibia. Regularly reviewing your credit report allows you to spot inaccuracies, unauthorized accounts, or potential signs of identity theft.
To obtain your free credit report, you may visit:
1. TransUnion at Namibia / TransUnion Africa and follow the instructions provided.
2. Credit Info for consumer information – Credit Info Namibia and follow the instructions provided. Once you obtain your credit report and you come across inaccuracies, discrepancies or disagree with the information presented, it's crucial to take prompt action to correct these errors. Please log a dispute with the relevant credit bureau as any incorrect information could impact your ability to obtain finance.
Factors influencing your credit score
Your credit score, a numerical representation of your creditworthiness, is derived from the information in your credit bureau report. Several factors contribute to your credit score:
1. Payment history: Timely payments on credit accounts significantly increase your score.
2. Credit utilisation: This is how well you keep within your facility limits prescribed by the credit provider. Try not to exceed the limits provided and keep the ratio between what you owe, and the limit provided, low.
3. Length of credit history: The longer your credit history or the more credit you have, the more favourably it's viewed by lenders.
4. Types of credit in use: A healthy mix of credit types, such as credit cards, mortgages, and instalment loans, positively impacts your score.
5. New credit: Refrain from opening multiple new credit accounts in a short period as this may adversely affect your score.
Improving your credit score
If your credit score isn't where you want it to be, you can take proactive steps to enhance it. Remember, a good credit score will enable you to get financial assistance at a time when you most need it. Below are some ways to improve your score:
1. Pay bills on time: Consistently making on-time payments is the most effective way to improve your credit score. Where possible, load debit orders to ensure that all obligations are paid on time with minimal effort.
2. Reduce credit card balances or overdraft limits: Lowering credit card balances or overdraft limits can positively impact your credit utilisation ratio.
3. Check for errors: Regularly review your credit report for inaccuracies and dispute any discrepancies.
4. Avoid opening unnecessary accounts: Opening too many new accounts within a short timeframe can be perceived negatively.
5. Diversify your credit mix: A diverse mix of credit types, responsibly managed, can positively impact your credit score.
Understanding your credit bureau report is a crucial aspect of financial literacy. By being aware of what influences your credit score and taking proactive steps to improve it, you empower yourself to make informed financial decisions. Regularly monitoring your credit report and implementing sound financial practices will not only enhance your creditworthiness but also pave the way for a more secure financial future.
* Patricia Louw is Old Mutual Namibia’s Finance Credit Manager.
** Opinion pieces and letters by the public do not necessarily reflect the opinion of the editorial team. The editors reserve the right to abridge original texts. All newspapers of Namibia Media Holdings adhere to the Code of Ethics for Namibian Media, a code established jointly with the Media Ombudsman.