As we come to the end of the Youth month, the Credit Ombud echoes the words of being responsible consumers, to the youth. Every year thousands of students join tertiary institutions and take the first step to shaping their future. With this, also come their first steps into the credit world, enabled by a student card and proof of registration at a tertiary institution.
The queries we receive from young people at our office are concerning, as most will complain about debt which they incurred while at tertiary institutions, which they failed to pay and now they are listed negatively at the credit bureaux.
Students can open a student cheque account and even get their first credit card by using their student cards and proof of registration, along with other documents as required by legislation. The credit cards are generally issued based on proof of income, which comes in the form of regular allowance deposits into their bank accounts. And furthermore, they open retail clothing accounts.
A student card also enables its holder to open accounts. All that is required is for the studentâs parent to confirm that the student gets an allowance, and they could be eligible for an account and some limits range from about R500 to R1500.
The pressures of tertiary life lead many young people to take on debt and due to the lack of information on credit related matters, they often do not understand what the consequences are for not paying their debt.
We are facing a youth unemployment crisis in our country. Some are able to obtain a tertiary qualification, but a bad credit record may cause them not to find employment, especially for those who want to venture into the financial sector.
We cannot âdownplayâ how a good credit score can open many doors for a bright future. Acquiring negative listings as a student not only places youth at a disadvantage when it comes to employment, but will limit, if not prohibit access to credit in the future.
Some organisations may seek to employ someone who needs to have their own car, or at least be able to get a car once they have been employed. With a bad credit score, you would not be able to get that vehicle, therefore missing another opportunity to get employed.
This year, the Youth Parliamentâs theme is âAccelerating youth economic emancipation for a sustainable futureâ. Set yourself free from the bondage of bad debt, if you do not need it, do not buy it on credit.
The over-indebtedness must come to an end. It starts with you as a young person who makes the conscious decision now to avoid bad debt. Here are a few tips to help you to avoid having bad debt:
1. Ask yourself whether you need to get the debt. Research for other legal alternatives that may be suitable for your needs.
2. If you really need to take out debt, then find a registered credit provider who will grant you credit that will suit your affordability. A credit provider that will patiently assist you in your decision and allow you to carefully read and understand what your credit agreement entails.
3. Once you have signed the credit agreement, know that you are liable to pay off the debt. Your monthly payments should be on time. Do not skip a month and do not pay less than the instalment amount.
4. If you find yourself in financial difficulties it is imperative to communicate with your credit provider and confirm your discussion in writing.
5. Do not run away from your responsibilities of paying your debt. If any of your contact details change, then be responsible to inform your credit providers. If you miss your payments and receive calls from the debt collectors, answer the calls as it gives you the chance to make alternative payment arrangements. Debt does catch up with you and avoiding it now may later come back as an emolument attachment order to your employer.
Yes, it is true that to get credit, you need credit. In our exhibitions and workshops with the youth, we explain that for a credit provider to grant you credit, there needs to be a credit record.
When you apply for big purchases such as vehicle finance, the credit provider will take into account your credit record. To start your journey in the credit industry and to build a good credit score, you may start with a credit card or a retail clothing account.
What we encourage is good credit, therefore once you have obtained your credit card or retail clothing account, be sure to maintain your debt by making your regular payments and paying your account on time.
Credit providers need proof that you are a responsible consumer and can only confirm that through accessing your credit record from the credit bureaux. Remember that you are a good credit score away from getting a good interest rate. With a good credit score, you can negotiate for a better interest rate with the credit providers.
Young people do not repeat the same credit mistakes that your parents made in the past. Make the following smart decisions when it comes to debt:
– Do not rush into credit just because you have a part time job·
– Try to avoid entering into credit agreements. Rather save and pay for your purchases in cash ·
– Avoid taking more credit than you can handle because you rely on your parents to help pay for your bills â they may not always be in a position to assist you·
– Keep a clean credit record so that your future job applications are not declined based on a bad credit history
– Check your credit report at the credit bureaux regularly to be able to fix wrong information timeously.
You can request a free credit report every twelve months. Young people, contact the Credit Ombud to help you if you have a complaint about negative information you challenged on your credit report. We are able to advice or assist in any credit related matter.
You may have a dispute about interest or charges on your loan, clothing or furniture account or against a micro-lender, non-bank vehicle or housing account, fraudulent listings, emolument attachment orders (âgarnishee ordersâ). We can be contacted at 0861 66 28 37; on the website www.creditombud.org.za; email at ombud@creditombud.org.za or by sms on 44786. The Credit Ombud is a recognised industry ombud scheme that resolves disputes between consumers and subscribing members of the non-bank credit industry, i.e., credit providers and credit bureaux. Our services are FREE.
