Credit declined, now what?

At the end of 2018, South Africans had financed fixed property and vehicles to the value of more than R1.3 trillion. Applying for credit should not be a daunting task, however, if you have been declined for credit, it is best to not make another application immediately. Rather ask the credit provider why you were not given credit and work towards fixing the problem. The main reasons and their solutions are discussed below.

Reason: Possible fraud and/or identity theft

The South African Fraud Prevention Service (SAFPS) may have spotted something suspicious on your credit profile. Credit providers cannot ignore this and have to wait for the matter to be cleared up.

Steps to take:

  • Contact the South African Fraud Prevention Service (SAFPS) on 0860 10 12 48 to investigate the matter.

Reason: Lack of affordability

Credit providers are worried that you will not be able to afford more credit with your current income and existing financial obligations.

Steps to take:

  • Check with the credit provider if you can qualify for a smaller amount.
  • Reduce your expenses and try to increase your income (e.g. sell unused items).
  • Pay off some of your existing debt before reapplying.
  • Save up some cash to use as a deposit.

Reason: Risky credit behaviour

Your credit history shows that you either have overspent or did not make a scheduled payment at some point.

Steps to take:

  • Going forward, always meet your payment obligations.
  • Always make your payments on time and in full.
  • Schedule your debit orders to go off after your salary comes in.
  • Immediately contact your credit provider if you realise you can’t make a payment.

Reason: Negative credit report

If the credit bureau report shows negative credit behaviour, your application will not be approved.

Steps to take:

  • Get your own copy of your credit report from a credit bureau (you get one free report per year).
  • Check the report for mistakes and request for it to be rectified.
  • Build a healthy credit score while you wait to apply again.
  • Always make your payments on time or make arrangements with your creditors to repay your outstanding debt over a longer term.
  • Request the creditors to inform the credit bureau of the arrangements and for it to reflect on your credit report.

As part of your efforts to obtain financial wellness, consider attending a free Iemas financial wellness workshop. These workshops are done at the workplace and are available to members as well as non-members. Click here for an example of videos that are used as part of the modules during workshops.

Adapted from https://www.capitecbank.co.za/bankbetterlivebetter/articles/your-credit-was-declined-now-what

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