Credit amnesty: What does it mean for you the consumer?
By Money 101 Correspondent - Sep.23, 2013 | Managing Debt
In the last few weeks it was reported in the news that Cabinet’s intends to introduce a credit amnesty. Cabinet will now put forward for public consultation.
As it currently stands, the amnesty will approve the removal of paid-up bad credit records and judgment information from the credit bureaus as a once off and thereafter as an on-going process. The amnesty could further apply to adverse or judgment information for which debt is still outstanding but there’s still no clarity on this.
So what does this mean for you if you’ve got debt outstanding or if you have paid up all your debts but still have a judgment against your name?
You still need to pay outstanding debts
So if you still owe money you would need to pay it, no matter what. Consumers need to understand; that the credit amnesty applies to deleting existing judgments on the credit bureaus that is already paid-up. What the amnesty does not mean is that your responsibility to settle any unpaid debt goes away.
What Should I do if I have Judgments or a bad credit record?
While you feel like running away and hoping that the government wipes your record clean no matter whether you’ve paid up your debt or not, you should take action. Until the bill is passed you still need to own up to your responsibilities
Will the credit amnesty make it even harder to get credit?
Unfortunately YES. The Banking Association of South Africa (BASA) has already warned that banks are likely to increase the price of credit to take into account the increased risk of taking on people that may have had poor credit records. Lenders will scrutinize personal credit profiles a lot more as well before giving credit.
So if you are a late payer in normal monthly accounts or have tendency to skip payments to credit providers, you will probably not be granted credit, and if you get, it will be at a much higher rate.
How can I keep a healthy credit record?
Make sure you know the difference between healthy credit and avoidable or expensive credit. For more look at our Com-Art Articles coming soon.
Understand the terms and conditions of any loan you might have.
Know what your minimum repayment amounts are and when they are due. Late or short payments can reflect badly on your credit profile.
If possible don’t borrow to the maximum that you are allowed to take. Best to lend enough for what you need
Don’t think that interest rates will stay the same. If possible get a fixed rate on your loan as to make sure that your budgets will allow you to pay the