INFORMATION ABOUT REMOVING ADVERSE INFORMATION FROM A CREDIT BUREAU

INTRODUCTION OF NOTICE

In terms of section 72(1)(a) of the National Credit Act (herein referred to as “the Act”), any person has a right to be advised by the Credit Provider within the prescribed time frame (20 days) before any prescribed adverse information concerning the person is reported to the Credit Bureau and to receive a copy of that information upon request.

Section 65(2) of the Act gives guidance / prescribed method of how documents should be delivered to a consumer if there is no prescribed manner. The document should be available to the consumer through one or more of the following mechanisms

In person at the business premises of the credit provider, or at any other location designated by the consumer but at the consumer’s expense, or by ordinary mail;

• by fax;
• by email; or
• by printable webpage; and
• In terms of section 65(2)(b) of the Act, a person required to deliver such documents must deliver it to the consumer in the manner chosen by the consumer from the options above.

 

THE 3 TYPES OF CREDIT BUREAU

 Full member credit bureaus

• Consumer Profile Bureaus (CPB),
• Experian,
• TransUnion,
• VeriCred, and
• Xpert Decision System (XDS).

Intermediate credit bureau members are:

• Managed Integrity Evaluation (MIE) and
• Tenant Profile Network.

Reseller credit bureau members are:

• Credit IT Data Risk Management Solution,
• Lexis Nexis Risk Management Services,
• Searchworks 360, and
• Africa Credit Bureau.

 The commonly used credit bureaus are Experian (011 799 3400), TransUnion (0851 48 24 82), Compuscan (021 888 6000), and XDS (011 645 9100).

 

CONSEQUENCE OF BEING BLACKLISTED

When someone is blacklisted his/her chances of obtaining credit from any Credit Provider are very slim to none. This is because his/her inability to pay historic debts, guarantees his/her inability to pay future debts. Therefore, he/she will fall under a high-risk credit consumer, and his/her credit score would be less than the required minimum score.

The term blacklisted can apply to situations of an account which is in arrears, a letter of demand for outstanding debts or possibly a judgment having been granted against the Credit Consumer.

Despite the settling of and an outstanding debt by a Blacklisted consumer, his/her credit profile is tainted for several years depending on the at type of listing made.

 

TYPES OF LISTING AT THE CREDIT BUREAU

• Default Listings

• Civil Court Judgment

• Administration Order

• Sequestration Order

• Debt Review

 

INFORMATION ON CREDIT REPORT

Credit Bureaus list both positive and negative information concerning a consumer. Section 70(1)(a) to (d) explains the meaning of consumer credit information, in which the list is not limited to the below;

• Personal information

• Payment profile

• Credit listings

• Defaults

• Judgments

• Notices

• Notarial Bonds

• Trace Alerts

• Enquiries

 

RESPONSIBILITY OF THE CREDIT BUREAU

Section 70(2) and (3) is noticeably clear on what are the responsibilities of the Credit Bureau. Some of the responsibilities

• accept the filing of consumer credit information from any credit provider on payment of the credit bureau’s filing;

• accept without charge the filing of consumer credit information from the consumer concerned for the purpose of correcting or challenging information otherwise held by that credit bureau concerning that consumer;

• take reasonable steps to verify the accuracy of any consumer credit information reported to it;

• retain any consumer credit information reported to it for the prescribed period, irrespective of whether that information reflects positively or negatively on the consumer;

• maintain its records of consumer credit information in a manner that satisfies the prescribed standards;

• promptly expunge from its records any prescribed consumer credit information that, in terms of the regulations, is not permitted to be entered in its records or is required to be removed from its records;

• issue a report to any person who requires it for a prescribed purpose, or a purpose contemplated in this Act, upon payment of the credit bureau’s fee except where the Act explicitly provides that no fee be charged;

• not draw a negative inference about, or issue a negative assessment of, a person’s creditworthiness merely on the basis that the credit bureau has no consumer credit information concerning that person; and

• a credit bureau may receive, compile and report only other prescribed information in respect of a consumer; and

• a credit bureau may receive consumer credit information in respect of a consumer only from other prescribed persons.
• not knowingly or negligently provide a report to any person containing inaccurate information.

Furthermore, section 71A(2) of the Act states that the Credit Bureau must remove any adverse listing contemplated in Section 71A(1) of the Act within seven days after receipt of such information from the Credit Provider.

 

SOME OF THE IMPORTANT RIGHT OF EVERY PERSON

In terms of section 72(1)(b) of the Act, every person has a right to inspect any credit bureau, or national credit register, file or information concerning that person

• without charge-

1. as of right once within any period of twelve months;
2. if so ordered by a court or the Tribunal; and
3. once within a reasonable period after successfully challenging any information in terms of this section, for the purpose of verifying whether that information has been corrected;

• at any other time, upon payment of the inspection fee of the credit bureau or national credit register, if any;

Section 72(1)(c) of the Act states that every person has a right to challenge the accuracy of any information concerning that person-

• that is the subject of a proposed report contemplated in paragraph (a) (referring to Section 72(1)(a) of the Act); or
• that is held by the credit bureau or national credit register, as the case may be,

and require the Credit Bureau or National Credit Regulator, as the case may be, to investigate the accuracy of any challenged information, without charge to the consumer; and

It is important to point out that in term of section 72(1)(d), every person has a right to be compensated by any person who reported incorrect information to a registered Credit Bureau or to the National Credit Register for the cost of correcting that information.

 

WHAT HAPPENS WHEN INFORMATION IS CHALLENGED AT THE CREDIT BUREAU.

In terms of section 72(3), when Credit information is challenged, the Credit Provider, Credit Bureau or National Credit Register, as the case may be, must take reasonable steps to seek evidence in support of the challenged information, and within the prescribed time after the filing of the challenge must provide a copy of any such credible evidence to the person who filed the challenge, or remove the information, and all record of it, from its files, if it is unable to find credible evidence in support of the information, this is subject to section 72(6)of the Act.

The person who challenged the information held by a Credit Provider, Credit Bureau or National Credit Register may apply in the prescribed manner and form to the National Credit Regulator to investigate the disputed information as a complaint under section 136, within 20 business days after receiving a copy of evidence in terms of section 72(3)(a) of the Act

Therefore, a Credit Bureau or the National Credit Register may not report information that is challenged until the challenge has been resolved in terms of Section 72(3)(a) or (b) of the Act.

 

THE REMOVAL OF RECORDS THROUGH DEBT RE-ARRANGMENT

Section 71(1) of the Act states that a Consumer may receive a clearance certificate from the Debt Counsellor within seven days after the consumer has

• satisfied all the obligations under every credit agreement that was subject to that debt re-arrangement order or agreement, in accordance with that order or agreement; or
• demonstrated-

1. financial ability to satisfy the future obligations in terms of the re-arrangement order or agreement under-

• a mortgage agreement which secures a credit agreement for the purchase or improvement of immovable property; or
• any other long-term agreement as may be prescribed;

1. that there are no arrears on the re-arranged agreements contemplated in section 71(1)(b)(i) and
2. that all obligations under every credit agreement included in the re-arrangement order or agreement, other than those contemplated in section 71(1)(b)(i), have been settled in full.

 

THE REMOVAL OF RECORDS THROUGH ADVERSE CONSUMER CREDIT INFORMATION WITHOUT LETIGATION.

When starting to remove adverse listing or judgements debt on a consumer’s name, it would be best to start with a letter requesting that such information to be removed by the Credit Provider who submitted and/or authorised a third party to submit such information.

A Credit Provider must submit to all registered Credit Bureau within seven days after settlement by a consumer of any obligation under any credit agreement, information regarding such settlement where an obligation under such credit agreement was the subject of the below listed classifications as listed in terms of section 71A(1)(a)(d)

• an adverse classification of consumer behaviour;

• an adverse classification enforcement action against a consumer;

• an adverse listing recorded in the payment profile of the consumer; or

• a judgement debt.

Section 71A(3) states that If the Credit Provider fails to submit information regarding a settlement as contemplated in section 71A(1), a consumer may lodge a complaint against such credit provider with the National Credit Regulator.

Furthermore, it is with pointing out that should the letter to the Credit Provider not be fruitful, then a consumer may lodge a dispute regarding such information with the Credit Bureau by submitting the following documents.

• Dispute form
• Affidavit
• Supporting evidence which is sufficient to prove your case or
• Any documents which are requested from the consumer by the Credit Bureau

The other route would be to Lodge a dispute with the National Credit Regulator if a consumer is not happy with the outcome of the Credit Bureau. Furthermore, one can lodge a complaint with the Ombudsman.

 

LITIGATION IN COURT

I underline some of the cases which may be of relevance in different circumstances should a consumer or a legal advice find himself / herself in such situation.

 In the case of TransUnion Credit Bureau v Nyoka[1], the court on appeal dismissed the application of the Respondent (Nyoka) and made a cost order of attorney and Client scale on the ground that Mr Zono, the legal representative of Respondent avoided to consider the advice of the Applicant (Credit Bureau) that if he wished to dispute the adverse consumer information than he should follow the guidelines as set out in section 72 of the Nation Credit Act which would be the most less costly method of disputing such information but he decided to request further contact information of the individual who lodged the adverse information through the application to the High Court, even though such information was provided to him and if he wanted to receive addition information he could have used other methods such as looking up such information of google[2]. Furthermore, in granting cost against the Respondent Attorney the Judge cited the following[3] –

“When considering whether or not to grant costs de bonis propriis against the representative or agent of a litigant,

(t)he general rule is that a … person in a fiduciary position, is not liable for costs of litigation de bonis propriis unless he has acted mala fide, or negligently, or unreasonably and this applies to him whether the costs are those incurred on behalf of the trust [the client] or to opponents.”[4]

In the case of Woolf v Nedbank Limited[5], The Respondent processed adverse information to the Credit Bureau even though the Applicant had disputed the indebtedness to the Respondent by sending several emails after receiving the letter of demand. Furthermore, the latter informationfurnished by the first respondent was inaccurate and incorrect as far as it listed the debt as having been written off. In addition, the Respondent issue the Applicant with summons and the Applicant served its notice of its intention to defend and that qualified as a dispute. Accordingly, the Respondent was not entitled to furnish the Credit Bureau with the applicant’s adverse credit information in circumstances where the applicant fiercely disputed the debt.

In the case of Nedbank Ltd v Soneman and Another[6], the Applicant wanted to rescind its default judgement against the Respondent because the application was brought by consent between the parties. The purpose of the order is to restore the Respondents creditworthiness with the relevant Credit The application was declined because the rescission of judgment as foreshadowed by the bank in this case would also set a dangerous precedent. Therefore, a judgment correctly sought and obtained cannot be rescinded on the mere ground that the parties had consented thereto, for this would amount to an untenable falsification of the past.

In the case of Botha v Koekemoer; Mafakane v MSA Consultants[7], 2 applications were made on the unopposed roll with the same prayers which were, that the applicant be declared no longer in debt review, that the Credit Bureau remove the debtor review status from the Applicant’s credit reports and that the Debt Counsellor provide Form 17.W confirming that the Applicant have been declared no longer over indebted. It is important to note that these 2 applicants were dismissed because the Court has declared the Applicants over indebted. The Judge made the following comment in para 22.

“Until such time that an application for debt review is heard by a magistrate and an order in terms of section 86(7)(c)(ii) is made that an applicant’s obligations are rearranged, such an applicant is not over indebted for purposes of the NCA. I disagree with the reasoning that that a court is merely required to confirm the status of a consumer who applied for debt review. A consumer may be factually over-indebted when an application is submitted to a debt counsellor, but the law takes no cognizance of that fact until the consumer is declared over-indebted by a court of law. A debt counsellor has no power to declare a debtor to be over-indebted. As stated previously, courts do not act as a rubber stamp for a debt counsellors to give judicial recognition to, or approval of, a conclusion reached by the debt counsellor. The NCA does not deprive magistrates of their judicial independence. The final arbiter to pronounce on the over-indebtedness of a debtor is the court.”

[1] Transunion Credit Bureau v Nyoka 2016 JDR 1691 (ECG)

[2] Transunion Credit Bureau v Nyoka 2016 JDR 1691 (ECG) at para 22

[3] Transunion Credit Bureau v Nyoka 2016 JDR 1691 (ECG) at para 24

[4] Caldwell’s Trustee v Western Assurance Co 1918 WLD 146 at 158 et seq, citied with approval in

Venter NO v Scott 1980 (3) SA 988 (O) at 994.

[5] Woolf v Nedbank Limited 2017 JDR 1689 (GJ)

[6] Nedbank Ltd v Soneman and Another 2013 (3) SA 526 (ECP)

[7] Botha v Koekemoer t/a The Debt Expert 2 and Others; Mafakane v MSA Consultants t/a ConsumerFinancial Services and Others (7723/2017; 750/2018) [2018] ZALMPPHC 20