The office of the credit ombud has seen many consumers complain they are blacklisted for debt they did not acquire.
On the other hand, some consumers ask credit providers to modify their payment profiles on their accounts to reflect a better credit record.
If these accounts reflect a history of late payment, this could affect their ability to be granted further credit when they apply for it.
Temel Ritief* recently wrote to the credit ombud with a complaint pertaining to a home loan.
“The lender has included my husband’s home loan on my credit profile, even though the bond is in his name. I have queried this with them. They say that, because we are married in community of property, the home loan is my debt as well.
“The problem is he earns five times more than I do. I am unable to get any form of credit because my debt utilisation compared with my income is more than 80% due to the listing.
"What I earn is not enough to sustain a bond of this size. If this is the new ruling with regards to home loans, shouldn’t I have his salary reflected as income on my side as well?
“I have tried talking to the lender, to no avail. We have had our home loan with them for 15 years and this listing has been added to my credit profile over the past year.
"I have spoken to one credit bureau, which is the only entity including this in my profile. It has directed me back to the lender.”
Some consumers believe the debt they take out during marriage and the reporting of the debt to credit bureaus would affect the one and not the other – especially if the debt was applied for by the one party or if they are the one responsible for the payment.
This opinion is formed mainly due to a lack of knowledge about contracts, how credit bureaus work and how information is passed on to them.
Temel’s main concerns are:
. Her husband is responsible for the payment of the bond;
. Based on her salary, she would not qualify for a bond of that amount;
. The bond is listed on her credit profile, which affects her affordability when applying for credit; and
. The full bond amount is listed.
When applying for credit while married in community of property, particularly when it comes to home loans, parties are jointly and severally liable for the debt. This means that two or more persons are equally fully responsible for the debt.
It means a creditor may pursue a debt obligation against any one of the parties.
In other words, the debtor may collect the entire debt from any one of the parties, or from all of them, until it has been paid in full.
If any of the parties do not have enough money or assets to pay an equal share of the debt, the others must make up the difference.
Joint accounts (home loans, for example) do not just apply to married couples.
Unmarried individuals can apply for a home loan jointly. The advantage of joint accounts/loans is being able to qualify for what you would not necessarily qualify for with your income alone.
The disadvantage is that, should both or one of you default, you will both be liable for the debt and both of your credit records will be affected.
What is important to note is how this information is recorded in the credit bureaus and what happens when the debt goes into default.
While the joint account is still active, the following information is recorded on both parties’ credit records (payment profile):
. Type of account – this includes home loans, revolving credit and credit cards, among other accounts;
. Ownership type – this indicates whether this is a joint loan or not;
. Number of joint loan participants – this indicates how many parties are responsible for the debt;
. Opening balance – this is the total amount provided at the time the account was opened;
. Current balance – this is the current amount owing on the debt;
. Terms – this is the number of instalments needed until the debt is paid;
. Instalment amount – this is the minimum amount due every month;
. Repayment frequency – this indicates how often the debt must be paid off (for example, monthly or quarterly);
. Months in arrears – if the debtor has missed payments or is behind with payments; and
. Overdue balance – when the account is up to date, the balance will be zero. However, if there are missed payments, it will reflect the amount owing.
This information is reflected for the duration of the account until it is paid up or if the debt goes into default and results in a negative listing being loaded onto the credit profile.
Should the account go into default and the negative information is passed on, be it default or judgment, this will reflect on all parties responsible for paying
Although Temel wanted the account details of the joint loan to be removed from her credit profile because her husband was responsible for the payment, the information will reflect on her credit profile until it is fully paid.
* Not her real name