For a nation of card-swiping shopaholics, South Africans seem surprisingly unconcerned about their own credit scores.
Although nearly three-quarters of South Africans say their credit score is important to them, only 45% of them understand how credit reports are generated, according to a TransUnion survey released on Monday.
The international provider of credit information and information management services said in a statement that most consumers were confused about credit scores and reports, with just 36% of survey respondents recognising there was a difference between the two. (A credit report is a record of how consumers manage their money. It is analysed to create a 3-digit credit score.)
“Credit is foundational to overall financial wellness, but so few South Africans are monitoring their credit, and many don’t understand credit basics,” said Garnet Jensen, senior director for TransUnion.
The online survey of 1 001 South African consumers conducted in August found that few consumers took even the most basic steps to understand their credit. A total of 33% of respondents said they had never checked their report, 41% claimed to have checked in the last year and 8% report having checked in the past 30 days.
And even this does not seem to be a true reflection of the facts. According to the most recent Credit Bureau Monitor report released by the National Credit Regulator, less than 3% of credit active South Africans check their free credit report annually, as they are entitled to by law.
Even among those in the survey who claimed to monitor their credit, a majority incorrectly responded that age (62%) and employment history (55%) were factors in their credit score.
“These findings signal a need for better credit education for all South Africans,” added Jensen. “One’s credit directly affects his or her ability to take a loan and all consumers. Even those who are already regularly checking their credit scores will benefit from a deeper understanding of how it’s calculated.”
TransUnion is attempting to educate consumers about their credit scores and debunk common myths.
One popular myth that seems to require debunking immediately is that checking your credit report can lower your credit score. In fact, TransUnion says, checking your credit score will not affect it, as this is considered a “soft inquiry”, in other words part of the normal course of business rather than part of an application for credit.
– African News Agency (ANA)