 Good evening. Welcome to your Friday dose of property insights brought to you by the private property. My name is Zemwontu Okumalu, but I'm Martha Shingange, and I'm excited to be with you this evening as your new guest presenter standing in for Zama. Now we are on Facebook, we are on YouTube and Instagram every weekday at 7 p.m. taking all things property related. The private property also has other great shows, whether you are an investor, whether you're an investor looking for a new property or you are into farming. Our lineup of these shows starts with the Home Shopper Show, which is on Monday and Friday at 8 p.m. with Chad Rivera. We then have the farming podcast with Mbali Noko on Tuesdays and Thursdays for our green-fingered enthusiasts. On Wednesdays you can catch Esther Klassen on the first-time home buyer's show at 8 p.m. Remember to like our pages and share the content. Someone needs that information to become a property mogul. Now to wrap up the week, this evening we are tackling the important subject of managing your credit score. This is an important part and the foundation of your financial goals. Specific to property, as one of the biggest assets one can acquire, it is important to have a good credit score to get your food into the market and to continue growing your property investment portfolio. Now to help us understand the ins and outs of managing our credit scores. I'm joined by Peter Menon, who is the head of Legal and TPN Credit Bureau. We know that TPN is a friend of the private property podcast. We have them quite often on the show, so they are really part of the private property community and family. Good evening and welcome Peter. It's such a great pleasure to have you this evening. Good evening Martha. It is such an honor to be able to share your Friday night with you and to invite me on your first of the Women Are Series, first menu I'm sure. So very honored to be here. Thank you so much. Thank you so very much. I hope you are keeping warm this evening. It's been a few very, very chilly cold evenings and days around South Africa. I think everyone, even our viewers, in case at the end they have caught the cold. So I really hope you are also keeping warm where you are this evening. Like you said, I think the entire country is suffering under the cold at the moment. So yes, stay safe, stay warm at the moment. Thank you. Absolutely. Now let's get on with it, Peter. Let's start with the basics because sometimes we can assume that people know what is a credit score. So for those who are new into those who have just started working possibly and they keep on hearing about a credit score. They don't know what it is about. Can you tell us what is a credit score? Thank you, Martha. I think an important sort of question from the start is what is a credit bureau? Because at the end of the day you've got to understand where the information is actually stored and where the information is kept because it's different companies in South Africa that are registered as credit burials in terms of the National Credit Act through the National Credit Regulator that are mandated by the National Credit Act to collect credit information and other forms or datasets depending on their niche market. Now as a credit bureau at South TV and collects information specifically on tenants across the country and how tenants pay rental as well as how parents pay school fees so we've got our own unique datasets but a person or applicant's tennis school is made up of a number of different factors and specified categories in terms of the National Credit Act. Whether it contains personal information like a person's name, ID number, address details, contact details as well as including credit information on how a person has perhaps paid the banks, other credit or service providers so that is included in payment profile information so each and every single month those payment records get updated and then different information on specifically judgments and black listings or defaults as what they've called in the National Credit Act is also captured on a credit database. So all of those different categories combined would create a credit score for a specific applicant. It's important to note here that the credit bureau doesn't say whether a person may obtain a credit or not. It's purely based on the service provider or the individual financial service provider to determine that based on the generic categories or specialized categories that they utilize but at the end of the day the credit bureaus store information and they cohesively, holistically set out what all that information means in a scoring and a number of these credit bureaus do it in a different way. At TBN we've got a very simple way of scoring applicants from an A to F scoring, A being an excellent applicant to place whereas F would obviously be on your lower branch. Alright so we could almost say that a credit score it's around it's a measurement of a consumer's financial conduct almost. That's perfect that's such a great subject. Great stuff. So I think now that we understand what is a credit score and how that information ends up in their various credit bureaus and there's quite a few of them TBN being one of those. I would like to know from you what will then be classified as a good credit score because I know some you know they've got a total of 650 up to 700 others up to 800 when can I say that I now have a good credit rating. So quite an interesting question to ask when it comes to the specific scoring methodology. Like I said every credit bureau sort of uses different ones and it takes into consideration all the like you correctly said the financial scenario that a person finds himself at that point in time. So a good way of explaining this would be to say so for example I've got a store account at a specific service provider and I've got a card and I take out a certain amount or I spend a certain amount on that card. Now that obviously increases my debt ratio it makes my debt more and depending what those payments on how I make those payments each and every single month will affect the credit score each and every single month. So sort of it's monthly based it's not something that and I want everybody to understand this it's live data set so it's not something that gets sold a year ago and then never gets updated. The information must be accurate correct and up to date and that will create a person's credit score and a good credit score in a very simple answer would be a credit score that is a person is not over indebted versus a person's salary and obviously in terms of the payment profile records and how they pay those different service providers like the store account I've taken out and keeping those payments up to date meaning that those payments must be made on a certain date during a month depending on a credit agreement but usually before the first of the month and how that payment is made throughout the term of that actual arrangement and that will influence a credit score but a good credit score would be a person that maintains these payments and obviously does not have more debt than what they can actually carry. Oh that's that's quite insightful now perhaps a personal interest question so when recently I took out a a home loan to buy a new house I mean I've been paying my my you know I've been a good I've been a good citizen I pay my accounts every month on time but then I realized that my credit score actually went down which was quite surprising it was it was a shock because I'm like here I am doing all the right things that I'm supposed to be doing what happened there. Oh very interesting question let's get into this it could be a number of different factors it could be as a result of there being further date that the date ratios have actually increased and as a result of the established income the credit score has decreased as a result it could be other information that is perhaps being pulled through perhaps one was registered in your name and and new information or rather new date came up as a result perhaps there was a store card that you took out during that period of time so it really depends on a number of different factors as I said Martha at the end of the day what the credit bureau tries to do what any credit bureau tries to do is utilizing the the data that is provided by different service providers and etc is to holistically take all that information so you'll need to have a look at your personal credit check to be able to answer that question if you'd like we can take this offline for you but I think what I'm trying to say is that also if you when when your debt goes up chances are that it is going to to to impact on your credit score even with the right the right things okay because other people might get alarmed and wonder what what it is that I did because I've been doing all the right things I'm paying everything on time but as you accumulate more debt that can actually also affect your credit score of course yes hundreds of years yeah awesome so speaking about the credit rating and we've just spoken about some of the things that can that we can do that can actually decrease your score what are those important things that we should be doing to maintain a good credit rating great question Martha obviously controlling your finances and controlling your debt is vitally important at the end of the day you've got to have let's call it credit but you've got to have information to be able to have a credit score but it's controlling that debt and understanding what you can afford and what you cannot afford another pitfall that I see on a daily basis is that people don't necessarily or they misconstrue how payments should actually occur on their accounts I think a lot of people falsely believe that they've got certain grace periods perhaps to make payments to their service providers whether that be a rental account whether it be a school account whether it be I don't know perhaps your plumber down the road there's a specific time period that you've got to pay everybody and similar to all agreements that you're entered into there's a specific date that you need to pay and the method I don't know where it was created that a person might have this grace period in which to make payments but in terms of the contract that you signed with the party with the service provider there's a specific date that you need to make payment on and if you do make payment late according to that contract and the information is loaded to the credit bureau which happens in the majority of instances there's a centralized database whereby all credit agreements and their payments get reflected so if you're late on those payments or even if you skip a payment on that it has an immediate effect on your credit rating and your ability to obtain credit in the marketplace so Martha just perhaps a suggestion when it comes to that because that's probably the biggest pitfall we see is that there's a misunderstanding regarding that if you've got a financial obligation to make payment whether it be your rental payments or there would be something else these specific payment dates and you need to need that so what a suggestion would be specifically on that is that you communicate and you speak to your different service providers whether it's your landlord whether it's the the different parties that have granted you credit if you are going to have a problem making specific payment that month that the communication is sent through that you speak to them about it so that there can be some form of leniency in that regard that the payment profiles don't necessarily reflect in that way because there is no different agreement reached between the parties but I think that's probably the major two pitfalls is misunderstanding debt and then also how payments are actually made in terms of your accounts reflect every single month I think that is very important Peter because I think sometimes when we find ourselves in difficult situations for example during these times these difficult times with COVID-19 where people you know some of them have lost jobs and some you know they have had their hours decreased and they're not getting their regular income it's very important that you speak to your creditors and come up to some some kind of an arrangement you shouldn't be running away ignoring those calls when they are trying to reach out to you because it can obviously affect you and I think we all know that it can actually also take quite a long time to recover you know it's not something that you can recover in in a space of a month it can take quite a long time to recover from a bad credit rating so it's very important that you guard your credit score with all that you have and yes make those arrangements with your with your credit providers when you find yourselves in a difficult question in a difficult situation rather so now you know I want us to also get to another issue which seems to be a bit of a challenge people come out of those difficult situations things are now looking up they are managing to to to settle their accounts on time and they and you know they're just really starting to clean up but then you find that it takes time with the credit bureaus to to to update their information what can I do as a consumer when I find myself in that situation where it's probably been about three months that I have paid up a certain all of my accounts and you know I've been conducting myself well again how do I get your tpns of this work to update my information on the system thanks Martha great question um I think an important segue into this would be that there is let's simplify this there's three different categories of information that usually gets loaded into a credit bureau that affects a person's credit rating the first is called payment profile information and that's what we've been talking quite a lot about tonight is monthly updates to the actual account okay that information stays on the credit record for a period of five years depending on the bureau some only displayed for two years but that information is displayed and unfortunately what happens is that once the month closes and this is why we said it's so important to speak to your creditors and to speak to the people that you need to pay because once that month closes unfortunately that record has been set for that period whether it's a did not pay or a partial payment or a paid late will reflect that for for that period then you get into a different category called black listings like some people know that it's a colloquial term we sometimes use but it's actually a default listing in terms of the act now there's a specific process to loading a default listing on a credit record you need to receive a 20 business day letter of demand and you need to be a period of three consecutive billing cycles in areas which means three consecutive months in areas if that is the case then a creditor could blacklist you in terms of the national credit act and there's a third category here which is called civil court records or judgments that a person would obtain now all of these have different retention records judgments specifically could could stay on for a certain period whereas defaults would only stay on for a period of one year or 12 months but your rehabilitation is purely based on what you do now if the accounts have been paid up and you have been blacklisted it's very possible that you can get a paid up letter from the creditor and it can be submitted to the credit bureau all credit bureaus have a have a dispute process in which the dispute can be lodged directly through the bureau by the by the party and we by the credit bureau now has 20 business days to go and manage that and find out the information from the creditor and if the information is incorrect it just gets removed from the bureau it actually gets lost for a period of 20 business days during that time period with judgments very similar also once you get a paid up letter and once the demand's been paid up the credit bureau is supposed to remove that information so you can contact the credit bureau about that as well but payment profile information unfortunately is one of those things that only new payment profile information and new activity on your tp and account based on the how you've paid the new wrinkle is going to affect you going forward but with blacklistings and judgments quite simple process for all our viewers out there as well if you do come across something that is incorrect in your credit report you can contact any credit bureau and lodge a dispute against the information that is actually captured on that report and through that disputes process it can be removed from any database as well oh great stuff thank you so much for sharing that information because it is quite important to know how we can actually speak to the credit bureaus because I think we we just we just look at that information and we just accept it and like you're saying that there are certain times where there could be mistakes that you can then approach the particular credit bureau and have them updated on their system so thank you so much for sharing that now to our viewers yes yes and we obviously when you make ourselves as approachable as possible so at the end of the day you're more than welcome to contact us directly should you have an issue with that credit report and I'll help desk representatives will be able to assist you with that dispute as well oh great stuff it's it's absolutely good to know that now to our viewers at home please do engage us in this engage in this conversation ask your questions and share your experiences on the comments sections of our social media pages we would really love to hear from you now peter you've been hearing a lot quite from me I think at this time I would like to take a few questions from our viewers now I've got a few questions and the first one is how would you suggest a positive credit score affect one who is interested in property investment or buying okay so goods credit score is definitely one of those things that the banks take into consideration for bond grant and depending on obviously once again their parameters based on the credit checks that they perform through their individual credit bureaus whoever they're going to utilize is going to affect that as well as obviously having a look at your debt ratios your current pay slips what's currently coming in but a good credit report is going to affect that in a major positive way because the credit report shows how you can upkeep or how you have kept up with your financial obligations and how you've kept up with your financial obligations is a very good indication of how you're going to do so in the future Martha you said so you need to protect your credit report and this is one of those things that they are going to take most certainly into a larger scale consideration when they base how much they're going to give you but also the payment terms of that specific loan whether that's for a hassle or another short term as well right so I think maybe just to flesh on that question what would you say one needs to start doing as they are preparing to buy the biggest asset which is property so let's say I'm planning in the next year or two years what should I be doing you know those little accounts should I be clearing them what should I be doing so that by the time I'm ready to go in approach my bank for a home loan then I know that I'll be able to get firstly that approval but secondly I mean we are all looking for a good interest rate isn't it and a credit record is a big part of of that so what can I do to prepare for that process I think firstly the most important thing is that you need to know you need to have knowledge and for you to know what's currently busy going on on your credit report you can contact any of the individual credit bureaus who will supply you with a free credit report and that's in terms of the National Credit Act you can request one from any bureau once a year so get that free credit report directly from the bureaus and then using that or utilizing that credit report either speaking directly to the credit bureau ourselves can be contacted to explain what the information on the credit report actually means and see exactly how you've made those payments whether you do realize that you haven't necessarily been the best payer over the last year you can obviously change that but I think the major thing is knowledge you need to know what is actually there so that you can change what is on the credit report itself proactively like you correctly said through perhaps making payments better throughout the next two years when you are looking for that property investment or contacting your individual credit providers if you do see on the credit report that the information perhaps is incorrectly reflected or that you need to make different payment arrangements with those parties because you see how you're actually really getting behind on this it is never too late to change and it's never too late to change your credit report it really isn't it might seem very daunting but at the end of the day there's proactive steps that you can take as a consumer but the first one is definitely requesting that free credit report so that you can see what's on the actual credit report itself so that you can determine what you need to do and once that's been done really taking those proactive steps to ensuring that payments are made on time and that compromise perhaps can be reached to certain of your creditors that you might be in areas with already okay great stuff so I think we are running out of time quite quickly it's been quite an insightful conversation so as we draw to the end of the show can you just quickly take us through some of the common mistakes that people do which impact their credit ratings great question mother I could love to share nuggets of information so please do please do but I can only speak from from our credit bureau side I think one of the most important things that we actually spoke about previously is a kindness is very underrated at the moment when it comes to all kinds of financial situations that you might be into I think specifically on your rental accounts if you might be in areas with those or if you have problems in paying those rental accounts negotiation and communication with the individual landlords prior to you not making payment I think is a theory it's so understandable at the moment everybody's having having some form of problem whether it's pandemic whether it was the period of unrest that we had at the moment as well or whether it's just the poll but financial pressure is there and everybody understands that so I think proper communication with the parties that you do own money to or might need to make payments to is such an important step I think people are understandable and they do they do want to assist where possible but I think proper communication prior to non-payment is vitally important so if I can leave everybody with that that's that would be great great stuff so I think you should be expecting our viewers to be approaching TP and other credit bureaus to get their credit scores and I think that is the first step so please go out there and get those scores Peter thank you so ever much for your time this evening for sharing nuggets and the insight around managing our credit scores it has been an absolute pleasure thank you so very much it's been an absolute pleasure more for thank you so much for having me thank you now we have come to the end of the podcast thank you for watching us tonight I have definitely taken some notes and I hope you at home you've also gained a lot of useful information now from all of us at private property have a great weekend at home Michelle I say stay safe and stay warm good night everybody good bye