The bad and the good in creditWhile everyone should avoid getting in trouble for bad debt, consumers need to consider the opportunities that become available with positive credit ratings. Reporting bureaus not just for blacklisting While everyone should avoid getting in trouble for bad debt, consumers need to consider the opportunities that become available with positive credit ratings. The notion of being in debt is not usually accompanied by strong positive feelings of personal success. In fact, with the number of Namibians applying for credit increasing every quarter, a major concern for the central bank has been a worrying trend in borrowing by households for unproductive luxuries.
That outlook tells only half the story though, according to local credit bureau Compuscan, who for the past 16 years has ranked among the country’s two leading companies collecting and maintaining individuals’ credit information for risk-management purposes.
“Many consumers might automatically assume that credit is bad, or that it gets them into trouble,” Compuscan Namibia country director Corné van Niekerk told members of the media in Windhoek yesterday.
“But the truth is that credit has the power to open the door to opportunity. It allows one to purchase a vehicle, to invest in a home or start up a business,” he said.
“The problem with credit arises when consumers don’t manage their debt responsibly.”
Addressing what he said was a common misconception about credit bureaus, Van Niekerk said the company is not simply meant to act as scaremonger to blacklist non-paying borrowers.
Instead, he said, these companies provide an important means for credit-active consumers to track their financial history as well as borrowing and spending habits, and prevent or recover from possible incidents of identity fraud.
Recent new legislation passed in Namibia, which places the functions of credit bureaus under the jurisdiction of the Bank of Namibia (BoN) has broadened the scope for expansion in the market, he said.
While improving consumer service by obliging local credit bureaus to supply one full credit report to a consumer on request per year, the local regulations also resulted in a more concise set of information being recorded by the industry.
“At Compuscan, we place special emphasis on ensuring that our data is up to date. This allows us to accurately calculate a consumer’s credit score, providing a true reflection of the consumer’s ability to manage their debt,” Van Niekerk said.
“This not only assists credit providers in making an informed decision about whether or not to extend credit to a consumer, or how much, but it also protects the consumer from overextending themselves.”
“This is why it is important for consumers to regularly check their credit reports to ensure that they are managing their finances wisely.
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