What is a credit bureau and what function do they play in the fluid world of finances? How long have they been around and what would happen if they ceased to be? When these questions are answered you will have an overview of what actually takes place when you wish to purchase something on credit. With knowledge of the process a creditor goes through you will realize the importance of being able to access your credit report from Credit Fundi South Africa.
The 3 Main Bureaus in South Africa are:
2. Experian credit bureau
3. XDS credit bureaus
Where They Came From
Credit Bureaus primarily existed back in the 19th century as small holdings that local tradesmen used to keep a list of those people with a history of not paying their debts. Their lists comprised of local businesses and personal loans. Before the use of credit bureaus a creditor would rarely extend a line of credit and then it was only to people he personally knew.
As the world entered a time of expanding growth businesses, as well as the population, became more mobile and increasingly interconnected. In order the keep up with the boom credit bureaus had to increase their reach. With increasing developments in data recording and storage, credit bureaus set about gathering as much information on individuals as possible. From employment records, past transactions, character references from landlords and even investigating the person’s daily habits. All of this was stored by the growing credit bureaus and used as a basis on whether the individual was eligible for a loan, as well as how much of a risk they were.
Credit bureaus are as much a business as any other. They provided a service and charged a fee for it. As in any business the one with the most resources holds the power. In response to this several of them band together in co-operation. They formed the Associated Credit Bureaus Inc. It became the regulatory body that safe guarded against fraud, money laundering and regulated the collection of data. Now all of the functions the National Credit Regulator, amongst other duties, provides.
What Is Wrong With Them
Credit Bureaus have grown massive and in doing so possess an enormous amount of power over the financial future of billions of people. Due to this they are bound by the National Credit Act which dictates how they gather and release the information that they have garnered. As result of credit bureaus being such large businesses they do not always verify the data they have, based on the pure volume that passes through their records. Therefore it was found that amongst 52 million accounts there was roughly 2% whose records were in error. It does not sound like much but 2% translates as 1.04 million peoples’ information being incorrectly passed on by a single credit bureau.
Without credit bureaus a creditor would not be able to extend credit to extent that they currently do. This would affect the consumer’s ability to purchase goods which would have a ripple effect throughout the whole economy, substantially weakening it. Credit bureaus are not infallible however, not even the leading providers like Experian, XDS and TransUnion. That is why it is so important to personally check your credit history through Credit Fundi South Africa today. We do not rely on a single credit bureau for your credit information but rather combine the data from TransUnion, Experian and XDS and your Kudough status to present you with the only most accurate and comprehensive credit report .