50% of South Africans have bad credit records but they can get bonds
Just under 50% of South Africans have poor credit records - but, if they take the right steps, they can still get bond finance.
According to the latest records, almost half of all economically active South Africans have some form of "credit challenge" that makes it difficult for them to qualify for home loans or other finance from the banks, says Rob Lawrence, national manager of Rawson Finance.
"We are regularly asked by bond applicants to try and sort these matters out. Fortunately, Rawson Finance and the other originators now have arrangements with organisations dedicated to rehabilitating people whose credit records would normally prevent them from borrowing again.
"Depending on the severity of the original misdemeanour, the process can take anything from three to 12 months. But the ultimate success rate is high, so it's definitely worth tackling the challenge."
He says certain issues can be quickly put right. For example, if a credit bureau's investigation reveals that clients generally pay their bills but do so irregularly or late, this implies that the problem is not so much lack of funds but poor organisation. The rehabilitation organisation can assist them to budget and plan better and so improve their credit profiles. They could then become creditworthy within six months.
If, however, clients have had court judgments against them on account of unpaid debts, this will be recorded permanently. It can then take up to a year to get recession orders from the courts and have any judgments cleared, provided the original debts have been repaid.
Certain debt defaulters have garnishee orders against them. These are imposed by the courts and make it compulsory for their employers to deduct fixed sums each month to pay over to creditors. Lawrence says any bond applicants in this situation will not be considered for loans until their debts are paid up.
" If the credit bureau's records show that at some stage applicants' debts had to be written off by creditors, it will take at least a year to get them rehabilitated - and, again, this will involve repaying the debt in full."
Lawrence says although many South Africans' debt repayment performances are not something they can be proud of, he and his team understand how it is possible for people to land up in these predicaments and are always willing to help debtors rehabilitate themselves with the help of their associate rehabilitation services organisations.
"The message we have to give is that people shouldn't despair, nor should they abandon plans to become homeowners. There is almost invariably a way out of these difficulties, especially if the original fault was due to hardship rather than a deliberate attempt to avoid payment , " says Lawrence.
Weekend Argus (Sunday Edition)