Payment Profile History - 13 things you must know.
Missing or paying an instalment late can affect your credit score. You will hurt your credit score if you miss one or two payments since on-time payments have the most impact. In the case of a perfect credit report with impeccable payment history, a late or missed payment can significantly lower your bureau report score.
There are times when it is difficult to pay a debt on time due to challenging economic conditions. It is challenging to pay off debts when you lose your job or face another financial crisis. The moment you find yourself facing hardship or a financial crisis, seek help immediately. This article provides answers to several questions about managing debt with debt review. You will learn how to deal with unmanageable debt from this article.
We will discuss some general terms so that you get a better understanding of all the jargon.
What is a poor payment profile?
Payment profiles contain a record of repayments on one or more of your bond accounts, vehicle finance agreements, credit cards, and loans. Poor repayment profiles will reflect negatively on a consumer's report. If a consumer does not pay or does not pay their debt in full before the due date, their score will be adversely affected. Those with a poor repayment profile are likely to have low scores and therefore be considered high-risk borrowers. Poor pay history in South Africa will make getting new facilities more difficult.
How important are my payment profile and credit history?
Whether you have a home mortgage, vehicle finance, credit-card, personal loan or even a simple clothing account, your history shows your ability to repay debts. Maintaining a good repayment profile and history shows lenders that you would have the means to make your future instalment payments on time.
Similarly, you will demonstrate to prospective creditors that you will struggle to service the new facility satisfactorily if you have a poor repayment profile.
Who creates my payment profiles or payment histories?
All registered creditor providers, service providers like cell phone companies and banks report your monthly repayments to the four major bureaus. These bureaus include Compuscan, Experian, TransUnion, and XDS, and the reports they receive indicate whether your monthly payments were paid on time, late, or missed. In simple terms, a repayment history profile with a lender is built month by month over some time. The bureaus then use this data to create a creditor specific payment history profile. Your payment behavior depends on whether you have a good payment history profile or a poor payment history profile.
Your payment behavior will be reported to the four major bureaus by all NCR registered lenders. When you find yourself unable to make any payments for a month, seeking help is key to building a good payment history profile.
Amongst the lenders who report this information monthly are banks, credit providers, furniture financial providers, payday loan lenders, and stores where you have revolving facilities.
A judgment against you for not honoring an agreement, being placed under sequestration, or having your salary garnished by a court can appear under public records/collections in your bureau report. Moreover, bureaus receive monthly public records, such as court and property records, to get a complete picture of your finances.
When is a payment marked late on bureau reports?
Registered NCR lenders and banks expect you to repay them what you borrowed from them. Your bureau score heavily depends on your repayment history profiles which is the history of how many on-time payments you have made on your facilities. Poor payment history of delinquent payments will result in a poor repayment profile, which will negatively affect your bureau scores.
Under the national credit act, payments are only reported to bureaus if they are at least 30 days past due. In most cases, a single missed account is not detrimental to your bureau score if you pay before the 30-day mark. If you pay late, you might get charged a late fee.
The information in your bureau reports plays a crucial role in calculating your scores. When you go 30 days or more past due on any account, your bureau scores will suffer.
Why do lenders rely so heavily on a payment profile history?
Credit providers want to ensure that they get their money back with interest when they offer you a loan, credit card or asset-based finance. Creditors heavily rely on the current Payment histories of your loans or credit cards accounts. Having a solid repayment history will be beneficial to you when these NCR registered lenders decide to approve your new application.
Repayment profiles are the most recent and relevant data on the willingness and ability to repay financial agreements. You will have a tough time getting approved for new financial facilities, home loan finance, and vehicle finance if you have missed payments in the past. Your finance application will get declined if you have judgments, defaults, or collection notices listed.
Where can I see if an overdue payment got reported on my bureau report?
Those who have not received approvals for new facilities should check all four of their bureau reports. Under the National Credit Act, you have the right to a free bureau report from each of the four major bureaus: Experian, Compuscan, XDS, and TransUnion. Check that payment modifications are being reported correctly after registering for a recent bureau report.
You can also check your account activity with some bureaus by registering on their website and gaining access to your profile. Additionally, some bureaus offer to notify you when your score changes. There might be a small fee associated with this service, but the investment is well worth it. You will be able to view your scores anytime and get notified when it changes.
How can I recover if I slip up and pay an account late?
Example 1: An account got paid late and is overdue by one month.
While you will get charged an overdue fee, your bureau score will not be negatively affected if you pay the past due arrears amount as soon as possible.
Example 2: If the account is more than two months late.
You must pay the arrears to this account as soon as possible. A sixty-day arrears indicator is a real problem, but it is not as bad as a 90-day arrears indicator, which is not as bad as the 120-day arrears indicator. Unfortunately, your bureau score has now taken a hit, but the sooner you can pay off the arrears, the better off you will be.
Example 3: When an adverse account was reported to the bureaus in error by a registered NCR lender.
Occasionally, bureau reports contain errors. You may want to dispute incorrect information, such as a payment considered late when you made a settled the due amount on the due date. You can raise this issue with the bureau or the creditor so that they will remove it from your bureau report. We will handle this frustrating process on your behalf if you struggle with raising this with the bureaus and creditors.
For my payment profile to positively impact my score, how long do I have to keep it?
You receive a good score when you have at least one good open account reporting to the different bureaus for a minimum of six months. By paying your accounts on time and establishing a good mix of account types, you can continue to build a good payment profile. A good mixture of accounts would include personal loans, home loans, vehicle loans, and revolving lines of credit like credit cards and clothing accounts. Consumers' financial situations vary, so the time it takes for their bureau scores to rise is different.
How long does my repayment history remain on my bureau report?
The information can stay in your bureau reports for five years from the last update. However, a poor history loses its impact over time.
Can I avoid being reported late if I make a partial payment?
No, unfortunately not. When you can't afford the minimum installment that is due, it may seem like a clever idea to pay a lesser amount. You will not be able to avoid an adverse repayment history. A partial settlement of the monthly due installment can even get you sent to the NCR registered lenders collections department, which will result in endless collection phone calls.
What can I do to avoid missed or partial payments?
By using these strategies, you can prevent financial problems:
- Plan to send emails, cell phone alerts, and calendar reminders about accounts with due dates coming up. Set up multiple electronic nudges if more than one is needed.
- Pay the minimum due on all accounts using bank stop orders. You can always make another transfer again later if your budget allows. You will never have to worry about delinquent payments on all your due accounts.
- Moreover, consider paying off your credit cards periodically throughout the month. A weekly or biweekly payment protects your account both from overdue repayments as well as from missing payments. The second-biggest influence on your credit score is your credit utilization, which improves when you keep your balance low compared to your credit limit.
- Consider debt review to deal with any uncontrollable debt and protect your payment profile and bureau scores. Debt review is a way to help consumers who are having difficulties meeting their monthly debt obligations. Debt counsellors negotiate payment arrangements on your behalf, reducing your monthly payments to a manageable amount ensuring no legal action is taken against you. Read the following articles to learn more about debt review and how it can help protect your payment history.
When should I close an account that is in good standing with a good payment profile?
It is essential to be careful about closing old accounts or opening new ones because your score is affected by the length of your history. However, it is essential to note that the average age of accounts is not necessarily the most influential factor. More than half of your score is determined by your repayment profile, your payment history, and how much you owe to credit providers. Maintaining a good payment profile and increasing your scores with all the different bureaus can be achieved by paying your accounts on time and keeping a low utilization rate on all your accounts.
Our recommendation is to keep an account with a solid payment profile and then work on closing accounts with a less than stellar payment history.
When should I close an account that has a poor payment profile?
It is essential to close adverse accounts as soon as possible because the negative history will affect your score while it remains open and unpaid.
Contact the lender if you decide closing the account is the best option and ask if there are any outstanding charges or fees. Ensure the registered NCR Lender sends you a paid-up letter once the account has been closed. Later, if the creditor still reports on this account even after full repayment, the paid-up letter will be necessary to dispute this inaccurate information.
Both your life and lifestyle are affected by your different bureau ratings and scores. Having a poor payment profile history, low score or having adverse listings on your report can severely impact your ability to buy a home, rent a flat, or find a job. In addition, you will get forced to pay thousands of rands in high-interest rates and security deposits.
Credit Salvage can help you improve your different bureau reports, payment profiles and remove adverse listings so that you can improve your life and lifestyle! We can assist you with credit clearing, credit bureau clearance, and ITC clearance. Please read the following articles or contact us today. In addition, we have an online Bureau Clearance Application where you can easily apply for our services.
Conclusion: Protecting your payment profile history will improve your creditworthiness, credit score and bureau reports.
Having a solid payment profile will show potential registered NCR lenders that you can pay your accounts to on time. This good payment profile will increase your scores and your creditworthiness. A poor payment profile and history with numerous delinquent payments will hurt your payment history. A poor payment profile will adversely affect your bureau scores and show potential credit providers you are a high-risk borrower.
You can build a solid payment profile history on your credit report by sticking to a budget and paying your accounts on time every month. Having this done every month will increase your chances of getting credit when you need it.