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Your rights when applying for credit

 In Articles, Information, Loans

Credit Agreements are the terms to which a consumer agrees to repay a lender or credit card company for money borrowed. When you take out a loan or a credit card, you enter into a credit agreement with the provider. Credit agreements are defined and regulated by the National Credit Act. The National Credit Act in South Africa was founded to provide support to consumers and is, therefore, established in your favour. This means that you have rights you may not be aware of.

Right to apply for credit

Every South African adult has the right to apply for credit. A lender or credit provider may choose to deny you a line of credit for reasonable business reasons but cannot unfairly discriminate against you based on race, religion, marital status, social origin, gender, sexual orientation, age, disability, culture, language etc. If you are refused a line of credit, you are entitled to ask the lender for the refusal reasons, which they need to provide in writing.

Right to understandable language

Consumers are entitled to be given a quote and credit agreement in the language that he or she reads (within reason). The documents should also be in a plain language and easy to understand. If you review your credit agreement and are unsure of the terms used, you can contact the lender for clarification.

Information held by Credit Bureaus

The information held on your credit report can have a serious impact on your life. If the information within the report is damaging, your credit score will be lowered, which will likely reduce your chances of being approved for credit in the future. As a consumer, you have the right to remove previous debt rearrangement information from your credit report, if all the obligations relating to that debt rearrangement were met.

A lender or credit provider must also notify you before reporting negative information to a credit bureau. You are entitled to challenge any information that is held on your credit report and the credit bureau, or the NCR, must investigate the accuracy of the information at no cost to you as the consumer.

You are entitled, by law, to one free credit bureau report per year.

Right to Confidentiality and Privacy

Credit Bureaus and lenders must protect the confidentiality of the information they keep on record. Lenders must also present you with the option to opt out from further marketing campaigns, including telemarketing, email and SMS campaigns.

Right to a cooling off period

In some situations, you are entitled to a cooling-off period with your credit agreement. A cooling off period will allow you to cancel the credit agreement (in writing) within five business days of signing – at no cost. This is not a required consumer right with all loans but some lenders may offer it as part of their service, so it is worth looking out for.

Early Settlement

As a consumer taking out a credit agreement, you are allowed to settle your debts early and at any time, after asking for a statement from your credit provider regarding the amount required to settle the debt. You should not encounter any fees for early debt settlement on small credit agreements, such as short-term loans. This doesn’t apply to larger credit agreements, however, like a large personal loan, where you may be liable to pay an early termination fee. All potential costs will be outlined in your original loan agreement.