Credit management improves in Q4 2015

The latest figures released by the National Credit Regulator (NCR) for the fourth quarter of 2015 revealing a decrease in the number of credit applications. However, despite this Compuscan, a credit bureau in South Africa, noted signs of better credit management during this period regardless of the trying economic circumstances.

Jacobus Eksteen, senior data analyst at Compuscan, stated: “In general, we did not see massive shifts between the third and fourth quarters of 2015. In fact, repayment behaviour amongst credit-active consumers seemed to be relatively stable, despite the weak state of the economy. While this doesn’t disprove that consumers experienced the impact of tough financial times, it could indicate that consumers are becoming more aware of the need to manage their credit wisely. Nevertheless, with inevitable increases in electricity tariffs as well as food and fuel prices, it is now more important than ever for consumers to manage their savings and expenses wisely, in order to maintain a good credit record or to improve upon it.”

Credit increases at the end of 2015

The NCR Consumer Credit Market Report for Q4 2015 revealed that the total value of new credit granted in the fourth quarter of 2015 increased to R124.15 billion, up 5.53% for December 2014. However, during this time the number of applications for credit decreased by 529, 000 for the third quarter of 2015 to 11.32 million for December 2015.

Mortgages accounted for the most credit applications, followed by secured credit agreements and credit facilities. For those applications received, the rejection rate was 52.05%.

During this time there was also a decrease of 0.12% in the number of accounts.

However, despite the decrease in the new applications for credit, the NCR highlighted that the outstanding debtors books for Q4 2015 was R1.64 trillion, 0.64% higher than the previous quarter. This indicates that the amount of money owed by debtors has increased despite the drop in the number of credit applications.

Compuscan’s top trends

According to Compuscan, the below positive trends were recorded by the company in the fourth quarter of 2015:

•          More consumers have access to credit.
•          There was a four percent increase in the number of accounts listed on the bureau since the third quarter of 2015.
•          There was a seven percent decrease in the number of judgements against consumers compared to the third quarter.
•          Adverse enforcements dropped by six percent: this included consumers being handed over, having their assets repossessed, or having an account written off or credit facilities revoked.
•          An increase of four percent in the number of mortgages for the lower income market (mortgages with a value of R300, 000 or less).

Tips to manage your credit

Compuscan offered the following tips to help people better manage their credit:

1.        Have a budget and include a debt checklist to prioritise which debts you pay off first.
2.        Identify areas where you overspend and limit those expenses. “Avoid spending money that you don’t have on goods or experiences that are not absolutely necessary,” stated Compuscan.
3.        Limit yourself to a few accounts and close those accounts which may tempt you to spend beyond your means, such as clothing accounts.
4.        If you are struggling to pay your debts, contact your credit providers to negotiate your payment plan and seek professional help from debt counselling experts.
5.        Get a copy of your credit report to see your credit rating. You are entitled to one free credit report from each credit bureau per year.