Credit Report Glossary

 

Account Status
A description of the current status of the account. The account status reveals whether the account is open, closed, paid up or handed over.

Automatic Payment
A set payment amount is automatically taken out of the account every month on the day specified. Also see Debit Order.

Borrower
A borrower is a person who receives funds in the form of a loan. The borrower is responsible for the repayment of the funds over a set period of time.

Cellphone Contract
A contractual agreement that is legally binding between the consumer and the service provider covering the contract period, billing and other terms of service relating to the use of a cellphone.

Collateral (or Security)
Personal property pledged as a guarantee that you will repay your loan. Property such as houses, cars, savings accounts, bonds, or certificates of deposit are commonly used as collateral.

Credit
An agreement (subject to certain terms and conditions) to buy now and pay later.

Credit Agencies/Credit Bureaus
Organisations that collect individual consumer credit information and provide Credit Reports to potential lenders, employers, landlords, etc., for purposes of aiding in their decision-making process.

Credit Card
A plastic card allowing the consumer to make purchases on credit.

Credit History
A record of your current and fully repaid debts. Your credit history helps banks and other financial services providers determine whether you have a history of repaying debts in a timely manner. This will help determine your creditworthiness. Your credit history will reflect on your Credit Report for a period of 24 months.

Credit Rating/Score
A credit rating or score is a points system based on the borrowing and repayment history contained in your Credit Report. The credit rating is used by banks and other financial services providers to determine whether a loan should be granted based on your risk profile.

Credit Report
A Credit Report is a confidential report that details your borrowing and repayment history and provides insight into your current credit status.

Debit Order
A fixed payment amount made by a consumer to a third party on an agreed periodic basis. Also see Automatic Payment.

Debt
An amount owed for money borrowed. The debt may be owed to individuals, banks, or other financial services providers.

Debt Administration
If a debtor is struggling to make their monthly repayments, a debt administrator (attorney) can apply to the court to extend the loan term. The debt administrator will then determine the money needed for the debtor's basic needs while the rest of the money will be used to pay off their debts. These payments often become a salary deduction in order to ensure that the debts are paid.

Debt Consolidation
Debt consolidation is when a debtor takes out one loan to pay off other smaller loans or debts. This is usually done to secure a lower interest rate. It also makes monthly repayments easier as the debtor is paying off one loan instead of many different ones.

Debtor
A debtor is an individual or company that owes money.

Debt Counselling/Review
Debt counselling/review is a formal legal process where a consumer is declared over-indebted. A debt counsellor will negotiate a restructured payment plan and obtain a court order confirming the new repayment plan.

Default
Default occurs when a debtor fails to make the necessary repayments on a loan. A credit provider then reports this to a credit bureau and this information remains on the credit bureau’s database for a period of one year. If the debtor is able to settle the debt, the information will be removed within seven days of providing proof of payment to the relevant credit bureau.

Employer
A person or organisation that employs people.

Gross Monthly Income
Gross monthly income is the amount of money earned before taxes or deductions are taken into account.

Home Loan
A lender, usually a bank or financial institution, that provides a sum of money to a consumer to purchase a home. The consumer then pays the lender in monthly instalments.

Identity Theft
The illegal use of someone else's personal information in order to obtain money or credit.

Interest Rate
A charge for money borrowed generally stated as a percentage of the amount borrowed.

Landlord
A person who rents out land or property.

Late Payment
A payment that was not made by the stipulated due date. If the payment is late by 30 days or more, it may be reported to credit bureaus and added to the consumer's Credit Report.

Lender
A person that allows someone the use of a sum of money under an agreement to pay it back later.

Line of Credit
An extension of credit subject to a variable interest rate that may be borrowed against when needed and paid back in the same manner and under the same terms as a loan.

Nett Monthly Income
The nett monthly income is the amount of money that is left after taxes and deductions have been taken into account.

One-Time Pin
A Personal Identification Number (PIN) that is sent to your registered cellphone number to verify a secure transaction.

Outstanding Debt
The amount owed on a debt or loan. For example, if you borrow R10 000 and paid back R2 000, the outstanding debt is R8 000. The outstanding debt may also include interest accrued on the balance.

Overdraft
An arrangement with a bank allowing you to withdraw more money than the account holds.

Payment History
The payment history refers to how the account has been paid over the past 24 months and whether there were any late or missed payments.

Personal Loan
A Personal Loan is a financial contract in which one party borrows a specific amount of money from another party that is to be paid back over an agreed upon period of time. It is a type of loan that can be used when experiencing long- or short-term cash flow problems.

Sequestration
When a debtor can no longer fulfil his obligations towards his monthly repayments, he can be forced to sell his personal assets. These assets can be sold in order to pay off or lessen his debts. Sequestration can be a lengthy and expensive process. Sequestration remains on a debtor’s Credit Report for a period of 5 years or until the debtor applies to be rehabilitated.

Store Account
An agreement between a consumer and a department store in which the consumer is allowed to make purchases on credit.

Variable Interest Rate
An interest rate which is tied to an index and fluctuates during the life of the line of credit.

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