Why are there different credit bureaus in South Africa?

You have probably heard about the larger credit bureaus in South Africa, such as Experian and TransUnion. But did you know that there are many more registered credit bureaus in the country?

We have a look at why there are so many, the exact purpose they fulfill, and the different kinds of credit bureaus that exist.

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Why are there numerous credit bureaus?

Annelene Dippenaar, chief legal and compliance officer at Experian South Africa, one of the largest credit bureaus in the country, gives an initial explanation as to why so many credit bureaus exist.

“The National Credit Act requires anyone who sells consumer credit information to register as a credit bureau. There is, therefore, a legislative requirement to do so,” says Dippenaar.

There are currently 43 registered South African credit bureaus on the National Credit Regulator (NCR) website.

According to Lebo and Neo Nong, co-founders of Nong Wealth, the various creditors look at different criteria when they consider applications, or increase credit limits. For example, one creditor might prioritise credit usage over payment history, whereas another may prioritise the length of the credit history.

They add that all credit bureaus in South Africa play a critical role in not only storing, but also maintaining information about consumers’ credit history.

“The more information stored and maintained monthly about consumers from different bureaus, the broader and more accurate the information will be overall,” they explain.

Finally, the Nong brothers say, the existence of these bureaus enables creditors to access different reports, while doing their due diligence to assess whether the consumer qualifies for credit or not.

“The different credit bureaus play an important role in facilitating the relationship between creditors and consumers by providing creditors with updated insights about the consumer,” they say.

READ MORE: What factors colour your credit application?

The different kinds of credit bureaus

“While most major credit bureaus serve the industry as a whole, there are also some niche credit bureaus that serve specific markets as well as resellers,” says Dippenaar.

She puts forward the following shortlist of the most commonly used credit bureaus.

Major credit bureaus: These are bureaus commonly used by lenders, banks, insurers, and other financial services providers to assess consumer or business risk, by way of credit reports and scores. These bureaus are data hosting facilities authorised by the NCR to host full credit information:

• Experian
• Consumer Profile Bureau (CPB)
• TransUnion
• VeriCred
• Xpert Decision System (XDS)

Niche credit bureaus: These bureaus primarily deal with specific types of information; for example, qualification or rental information:

• Managed Integrity Evaluation (MIE)
• Tenant Profile Network

Reseller credit bureaus: These are bureaus that source their information from the major credit bureaus and on-sell to creditors:

• Credit IT Data Risk Management Solution
• Lexis Nexis Risk Management Services
• Searchworks 360
• Africa Credit Bureau

“Niche and reseller bureaus will typically obtain the full credit bureau information from the data hosting bureaus,” says Dippenaar.

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