Credit Amnesty May Offer Some Relief for Home Loan Applicants with a Flawed Credit History

The credit amnesty recently announced by the Department of Trade and Industry (DTI) may make home loan applications a little easier for applicants with adverse credit records, say experts from ooba, South Africa’s biggest bond originator.

On 27 February, the DTI published the “Removal of Adverse Consumer Information Relating to Paid up Judgments Regulations, 2014, otherwise known as “the credit amnesty”. This came into effect on 1 April 2014 and all registered credit bureaus have to comply by 1 June 2014.

The credit amnesty relates to a once-off removal by all credit bureaus of adverse information on their records as at 1 April 2014, irrespective if paid or unpaid.  All civil court judgements where the debt has been settled will also be removed from the bureau records. Credit bureaus going forward are required to automatically remove all paid up judgements and paid up adverse information listings, however payment profile information displaying the payment history will remain on the bureaus records.

Consumers will no longer have to incur expensive legal costs to have judgements removed from their credit record or wait out the full retention period to have adverse information cleared, which will make access to new credit a little easier.   “Consumers are, however, reminded that the credit amnesty doesn’t mean that they no longer have to pay  back their debts , simply that certain negative records regarding the manner in which they previously managed their debt obligations will no longer be held on the records of the credit bureaus” says Kay Geldenhuys, Property Finance Processing Manager at ooba. “This was put into effect to  provide relief to consumers who may have gone through a difficult financial patch – for instance due to a family death or retrenchment – from being refused credit,  even though they can afford it,  or even denied a job once they have made amends.”

After 1 June 2014, all registered credit bureaus should be compliant with the credit amnesty regulations. Consumers should run their credit check after this date to ensure that their report has been updated, and register any queries with the bureau. 

Every South African is entitled to run one free credit check a year, so if you are considering buying a home, run your check through a registered credit bureau well in advance of applying for a bond,” advises Geldenhuys. “In this way, if there is any judgment or adverse listing that needs to be tackled to clear your record, you have ample time to do this.”

To improve your chances of getting a home loan approved, keeping your credit affairs in order is still your best bet. Pay back all your lines of credit in full and on time to prevent any legal action being taken and any black listing from occurring.   If there has been a judgment against your name, pay it back in full so that it does not adversely affect your credit record.