Ask Wendy: How do I take control of my prescribed debt?

Sadly, most people have their heads in the sand when it comes to their credit record/score, writes consumer journalist Wendy Knowler. She answers a reader's question about his prescribed debt and the steps he needs to follow to get it removed. 

Joseph wrote:

“I have prescribed debt or debt that I haven't been contacted about by creditors for almost three years. It related to a car that was repossessed in 2013 and a credit card, but it is listed on ITC. Can I get it removed and if so, what steps do I follow?”

Wendy:

A debt is considered to have prescribed if, in the past three years, you have not made a payment towards it, acknowledged that you owe the money in any way, or received a court summons in respect of it.  (State-related debt and home loan debt only prescribe after 30 years.)

It is illegal for a prescribed debt to be listed on your credit record, so that’s one reason why you should take advantage of your right to one free credit check a year from each credit bureau. See details below.

Sadly, most people have their heads in the sand when it comes to their credit record/score, finding out the hard way if it’s bad - when they apply for credit, such as a cellphone contract, and are turned down.

If you don’t pay what you owe on your store or credit card - that minimum amount due on your monthly statement, by the due date, it will cost you - not only in extra interest and penalties, but also in the form of an adverse listing, or “blacklisting”, on your credit record, which affects your ability to get new credit.

But did you know that if you only ever pay the minimum amount due every month, no more, you not only end up paying maximum interest, but your credit score will be impacted? That’s because this indicates to credit providers that you’re only just hanging in, financially.

So always try to pay a bit extra.

What’s the difference between a credit record and a credit score? SA’s biggest credit bureau, Transunion, explains it like this: “Your credit score is calculated by a credit bureau and while it is based on your credit report, it also takes account of how you pay your bills, how much debt you have and – importantly - how all of that compares to other credit active consumers.

In short, it gives credit providers a quick and easy overview of your general credit behaviour.

Other things that will negatively impact on your credit score, according to Transunion: having too much debt and applying for or opening too many accounts in a short period of time - it signals desperation.

Contact details of four major credit bureaus:

TransUnion: www.mytransunion.co.za, 0861 886 466

Experian: www.experian.co.za, 0861 105 665

XDS: www.xds.co.za  (011) 645 9100

Compuscan: www.compuscan.co.za   0861 51 41 31

If you disagree with a listing, lodge a dispute with the credit bureau. If, after 20 days, the adverse listing remains, you may approach the Credit Ombudsman for help, by calling 0861 662 837 or e-mailing Ombud@creditombud.org.za

* Listen to Wendy every Wednesday on Radio 2000 from 8.40pm to 9pm.