12 Nov Beginner’s Guide to Decoding Your Credit Report

Posted at 08:48h in Credit Score by

Decoding your credit report as a beginner can be tough. There are so many sections detailing metrics you’ve likely never heard of. How are you supposed to know what everything means, let alone how you should interpret it all?

Credit Boost has written a guide on deciphering your credit report as a beginner. What everything means, how to interpret it, credit scores explained, and how you can fix derogatory marks.

Let’s dive in!

The Anatomy of a Credit Report

Your credit report details:

  • Your particulars
  • Fraud indicators
  • Scores
  • Your debts
  • Payment behaviour
  • Loans you have
  • Public records
  • Collections history
  • Enquiries
  • Property interests
  • Principal links

Let’s discuss what each of these indicators means and their caveats.

Your Particulars

On your credit report, your particulars will fall under a section entitled “Personal Details Summary”. This section details your name, date of birth, gender, whether you’re married, and contact details. If any of these details are incorrect, dispute them with the bureaus.

Fraud Indicators

This section displays information verified by the Department of Home Affairs. It includes whether your ID number has been verified at Home Affairs, if you’ve been reported as dead, and if your ID number has been found on the fraud database.

Your Scores

There are two types of scores you’ll see on your Credit Boost report: Presage and NLR.

Presage Score

Your presage score is a generic score used to predict the likelihood of you not paying a loan back (defaulting) or falling into bankruptcy. It’s a generic credit score that accounts for your credit history, utilisation, delinquencies, and sometimes, behavioural factors (address changes, hard and non-footprint credit checks, payment history).

There are various credit score meanings. Generally, the higher your score, the more creditworthy you are. Lenders usually rely on Presage scores to determine whether they should lend you money and loan terms.

NLR Score

The NLR score assesses the risk of non-lending activities, like cellphone contracts and utility bills. It often incorporates alternative data, including utility payments, telecom bills, and rental history, to build a comprehensive view of a consumer’s payment behaviour.

Debts

This section summarises your existing obligations and whether legal action has been taken against you.

It details:

  • How many active accounts you have open
  • Your accounts in good standing
  • The number of accounts in arrears
  • How many accounts you have paid up or closed in the last two years
  • Your total number of monthly instalments
  • Total outstanding payments
  • Your total arrear amount
  • Your total adverse amount (write-offs and repossessions)
  • Total soft inquiries
  • Total hard inquiries
  • The number of accounts opened in the last 45 days

Then, your account offers a brief summary of the rest of your report–public records, derogatory marks, whether you have disputed anything recently, and whether you own property.

Credit Account Status

This section includes your 24-month payment behaviour of all credit agreements as reported by the Credit Grantors belonging to the Credit Providers Association (CPA), such as late payments.

Loans You Have

The Payment Profile: National Loans Register – NLR outlines loans you’ve taken out reported by microlenders (payday loans, small loans). Usually, these are loans under R5,000 to R10,000.

Public Records

Your public records section displays if legal action has ever been taken against you for not paying someone back. It includes:

  • Adverse accounts
  • Defaults
  • Administration orders
  • Sequestrations
  • Debt review status

Then, it outlines previous addresses, your cellphone number history, email address history, and employment history. Frequent changes in these details may indicate that you’re unstable, so your credit record mustn’t have too many address changes and the like on record.

Credit Enquiry History

This displays a list of all hard enquiries by credit providers. Too many indicate that you’re desperate for credit, so try to limit the amount of enquiries on your profile. Credit Boost offers soft enquiries: non-footprint credit inquiries. These are credit checks that don’t impact your score.

Property Interests

The property interests outline the properties you own, how big it is, and their place on the deeds register.

Principal Links

This section details whether you share financial obligations with anyone: in a business, as someone’s co-signer, whether you have a joint account with anyone, whether you’re the director of a business, and if anyone is an authorized user on your credit cards.

If you have derogatory marks on your credit report, use a credit clearance service to remove them. They’ll dispute derogatory information on your behalf to clean up your credit report. After the derogatory marks are gone, your credit score will go up and applying for credit will be easier.

Credit report guide for beginners

If you need help boosting your credit, contact Credit Boost or request a free online credit check. We would love to help you reach optimum financial wellness.