Credit invisible South Africans a huge problem
There are positives to having credit history.
ALMOST one fifth (19,15%) of adults in South Africa are ‘credit invisible’ – placing them at risk of never qualifying for traditional lines of credit.
In a statement, credit information provider Transunion stated: ‘More than 5-million adults in South Africa do not have a credit history recorded at any of South Africa’s major credit bureaus. Without any kind of credit history, consumers are largely barred from accessing credit and taking advantage of certain opportunities’.
For example, credit invisible individuals may find it more difficult to rent accommodation, purchase a home, buy a car, obtain insurance, get a credit card or a store card, or even obtain a student loan.
Not having a credit history, and therefore a credit report, effectively shuts people out of many common financial transactions, including those that may help them build wealth and manage their money.
It mires them in a poverty trap or forces them to use alternative and often expensive financial products that credit reporting bureaus do not track such as unsecured personal loans that invariably carry a hefty interest rate.
These loans can ensnare people in a cycle of debt that is almost impossible to break. The problem is that even if people do make timely payments on those loans, it won’t help their credit rating – continuing to keep them locked out of mainstream credit.
According to Statistics SA’s 2014 mid–year report, there are 27,3–million people over the age of 20 living in South Africa.
The Credit Bureau Monitor published by the National Credit Regulator, put the number of credit-active consumers in South Africa at 22,12–million.
