Bad Credit Holding You Back? Here’s How We Can Help You

Bad credit can stop you from taking out loans, obtaining favourable interest rates and fees, getting affordable insurance premiums, renting in a good area, and being hired for finance roles. Bad credit is often a result of your credit report having derogatory or bad marks – such as missed payments, a high credit utilisation rate, or a high debt-to-income ratio – that tell credit providers you’re irresponsible with credit or unreliable.

Luckily, there’s a way to dispute these marks: credit clearance. This is the process of writing a dispute letter to the credit bureaus to remove bad marks. It can dramatically increase your credit providers, insurers, and landlords that you are responsible with credit and trustworthy. This post discusses the credit clearance process for various derogatory and bad marks. We’ll also learn about how to write a dispute letter, how processes vary by marks, and how Credit Rehab can help.

South Africa’s most common bad credit marks are a high credit utilisation rate and late or missed payments. Here’s how to get rid of them.

How to Write a Dispute Letter

Writing a credit clearance/dispute letter is relatively straightforward. You’ll need to write a letter explaining your dispute, attach evidence, and attach supporting identity documents.

Start by identifying what you would like to dispute. A late payment? The debt review flag? Then, gather evidence that supports your claim, such as financial reports or the relevant forms. After that, draft a dispute letter outlining the incorrect information and explaining your evidence.

Remember to use a friendly and professional tone. It’s worth writing your letter clearly and concisely, checking for grammar errors or unclear explanations. Attach a copy of your ID, proof of residence (such as a utility bill), and a bank statement (if applicable).

Usually, you can dispute a bad mark on a credit bureau’s website. It’ll have 21 days to review your dispute and reach a verdict – it’s against the law for them to not investigate your dispute and your credit clearance right under the National Credit Act.

Marks You Can’t Dispute

If a mark has been accurately reported, there’s not much you can do to remove it. The credit bureaus check in with creditors before removing anything. So, if you actually paid late or missed a payment, it’s unlikely the mark will be removed.

The Most Common Bad Marks

This is how to dispute a high credit utilisation rate and late or missed payments.

High Credit Utilisation Rate

High credit utilisation rates result from using too much credit compared to what you have available. This could indicate that you’re credit-reliant and could be at risk of over-indebtedness, which may lead to defaulting (not paying creditors back). A healthy credit utilisation rate is 30%, preferably lower.

To fix a high credit utilisation rate, pay off a few balances, especially the high ones. The majority of your accounts having a low credit utilisation rate will show creditors you’re a responsible and reliant credit user.

Late and Missed Payments

Late and missed payments are another way creditors can ascertain whether you’re financially stable and a good lending candidate. Late and missed payments can make your credit score take a huge dip. If you’re unable to meet your monthly repayments, try debt review or debt mediation.

To dispute a late or missed payment that has been inaccurately reported, include a copy of your financial records that proves you paid on time in your dispute letter.

How to Fix Derogatory Marks

Derogatory marks are flags that appear in the public records section of your credit report. Some examples include default and voluntary judgments, debt review, defaults, prescription debt, administration orders, and sequestration.

Note that you can only dispute these marks if you have a rescission order and/or have completed making payments.

Voluntary and Default Judgments

To dispute voluntary or default judgments, you’ll need a rescission order stating that you:

• Have repaid the debts outlined in the initial court order.
• Fought the judgment and won.
• Were wrongly given the order.

You should ask your creditor or the court to submit the necessary forms. Then, write to the bureaus and include the general documents discussed above plus your 74Q rescission order or satisfaction of judgment letter. Credit Rehab can help you obtain these orders.

Debt Review Flag

Clearing your name from debt review differs by whether you were rejected in your application and the order was rescinded or have completed repayments to creditors.

• If you has the order rescinded because you were declared not over-indebted, you should submit your Form 17.2 b or c as evidence in your letter.
• If you paid back all your creditors and have completed debt review, you should submit Form 19 (clearance certificate) with your documents.

Ask your debt counsellor for these documents.

Defaults

You can’t dispute defaults if they were properly reported. If you didn’t default and can prove this with financial records, submit your evidence (such as a bank statement or charge notification) with your dispute letter in the same fashion as you would contest a missed or late payment.

Prescription Debt

Prescription debt is debt that neither you nor your creditor has acknowledged – either verbally or in writing – for at least three years (usually). Prescription periods vary by different sorts of debts. The period for credit card and car finance might vary, for instance.

To dispute prescription debt, submit evidence that neither party has acknowledged the debt in the prescribed period, such as correspondence or account records showing no activity within the prescribed period.

How We Can Help You

Credit Rehab’s team are expert in the credit clearance process. We can help you obtain the relevant court orders and forms, write a dispute letter, collect the necessary identification documents, and conduct follow-ups on your behalf.