Many aspects of our lives depend on the health of our credit score. Buying our dream home. Purchasing our first car. Even some career paths require an in-depth credit check before considering you as an employee.
South Africa has an ever rising unemployment rate, ongoing price hikes, a rising cost of living and salaries which often do not cover many of our needs. This has left many dependent on credit to survive.
But what happens when things go wrong?
What happens when your credit score has dropped to a point where you can no longer apply for credit for a car or even rent a house?
It is no wonder many desperately seek out credit repair services in the hope of a quick fix. But the reality is, repairing one’s credit report can be a lengthy process.
Warning: There is No Magic Wand
Don’t part with your money for any service that promises to magically remove valid negative information for an upfront fee. This includes things such as late or missed repayments, judgements and other valid listings.
Firstly, removing valid information from your report is illegal. And finally, you stand at risk of fraudulently losing your money. You cannot legally remove valid listings on your report unless they are errors.
If you want to voluntarily remove a debt review or sequestration notice, you can pay a service to assist you with rescinding the court order. In order to do this, you will need to prove your situation has changed according to the legislation the court order was granted on.
Legal Credit Repair Services
The good news is, you don’t need to pay someone to get your score up. Many of the services available to help you repair your credit report, can be done by you just as easily.
If you are unsure of how to best repair your report, you can pay for professional assistance and guidance. A reputable company will review your personal financial position and help you determine the best actions to take to get your score up.
How Long Does it Take to Repair?
As with all good things in life, fixing your credit score takes time, patience and an understanding of how your score is calculated.
If you can carry yourself financially to make the minimum repayments on time every month and pay off all outstanding arrears, this will be the first step towards fixing your score.
The amount of time it will take for your score to improve depends on the negatives on your report.
A judgment will stay on your report for 5 years before an application for rehabilitation to clear your name can be submitted. Or until the judgment is rescinded by the court as an error or paid in full.
A late repayment will stay on your report for 2 years.
Unfortunately there is nothing you can do to remove these types of negatives, except wait the term out. And keeping up with repayments going forward.
Can You Go From Zero to Hero?
The simplest way to start fixing your credit score is by paying off your debt on time and in full. It is important to note that your credit score is also based on how well you use your credit and how often you apply for more. Do not take out additional loans to pay off debt. This will only incur a greater sum of debt you will have to pay back over a longer period of time.
In order to avoid further negative marks on your credit report, you need to review your current financial situation. If you are purchasing groceries on credit with balances near their limit, it may be time to take a reality check.
If your credit score has suffered due to poor management of debt, there are still options available to you. However, it does depend on whether you are in the position to settle outstanding arrears, rescind a judgment, or even keep up with current repayments.
Option 1
If you were previously in financial distress but can now afford your minimum obligations and would like to fix negatives on your report, then take the time to find out how long it will take to drop off your report. Ensure you do not have any outstanding arrears and try only using 40% of the credit available to you. Use the time to build on your savings and to slowly reduce the total amount you owe instead.
Your score will grow each month. Depending on your circumstances it can take between 6 months to 5 years to fix your report.
Option 2
If you are earning an income but you are unable to pay off your minimum credit obligations every month, then legal assistance to reduce your instalments is available through a process called debt review. This process protects your assets and ensures you have enough to cover living expenses each month.
Depending on your circumstances it can take between 3 to 5 years to get rid of all your debt. Your report will reset to zero with a clean slate.
Option 3
If you do not qualify for debt review, you may decide to voluntarily sequestrate and apply to be declared insolvent. This process will however require surrendering assets such as your vehicle or home.
Depending on your circumstances it can take between 5 to 8 years to get rid of all your debt. Your report will reset to zero with a clean slate.
Beyond everything, your credit score is your economic lifeblood. It is better to ask for help, or simply for advice on which options are open to you. Speak to us before getting yourself into unmanageable financial and legal trouble. It is completely free to speak to a consultant either via WhatsApp or choose another method here.