Do you have any accounts that are in arrears (overdue), have you defaulted or, worse still, do you have financial judgements against you? If so, those statuses will ruin your credit score for years and make it impossible to be granted vehicle finance. Alan Quinn offers this guide that explains how to find out which accounts are in arrears – and how to fix problems with them.

This article isn’t meant to stir up paranoia, but it’s quite possible yourcredit record has a blemish or two. A recent report by Eighty20/XDS indicated that 60% of under-35s have an account in defaultand that over 90% of themare clothing accounts.If you have arrears on your profile, this will linger for at least 2 years. If the credit provider has got a court judgment against you, it will remain for 5 years!During this time, any vehicle finance applications you make are likely to fail.

To find out if you have accounts in arrears that are impacting your credit score, Cars.co.za has partnered with a company called JustMoney, which will show you your credit score for free and provide some useful information about what that score will mean when you apply for different types of credit;it also offers good advice about how to improve that score.You can register for a free JustMoney profile using the link below.

Click on this link to Register for Just Money

Once you have completed registration, look under the My Accounts tab for detail about all of the accounts on your Credit Profile.

Also Read: How to get a good credit score

Prescription of Debt

The first thing you must check is how long the account has been outstanding. You are not legally obliged to pay an account that has become “prescribed”.An account has become prescribed if:

The Credit Provider has not issued or served a summons on you.You have not given any acknowledgement of debt for the account in the last 3 years.You have not offered any payment for the account in the last 3 years.

One extra point here is that if the debt was for a house (home loan), the prescription period for that is 30 years.

If all three of the above are true, then basically the debt has “expired”…or it ispast its “sell-by”date. Should you believe that an account has been prescribed, challenge this by logging a dispute with the relevant credit bureau.

Ensure that you are provided with a dispute reference number and allow the bureau to investigate your dispute within 20 working days. Should the credit bureau not respond to you after the 20 working days or should you not be happy with their findings, you may then contact the Credit Ombud for further assistance.

Start with a Statement from the Credit Provider

If prescription is not an option, then you must obtain the current outstanding amount from the credit provider.The credit provider is legally obligated to provide a statement within 5 business days.Once you receive the statement, it is important to review it in detail.

Firstly, administrative errors may have occurred (they do happen!) and you could find that the amount has been paid, but the credit provider has failed, in some way, to update the bureau correctly.If this has occurred, then demand that the credit provider move the status of the account to “paid-up”and then update the credit bureau.You can make things happen quicker in this regard by requesting a “paid-up”letter from the Credit Provider and then logging a dispute with each of the credit bureaus yourself with the paid-up letter as evidence.The credit bureaus must investigate, resolve and update within 20 days.

Secondly, you have the right to dispute all charges (or part of any charge) that have/hasbeen made to your account. Creditproviders do have the right to add certain charges to your account because the account is in their “collections”or “legal”process.However, the National Credit Regulator has strict rules about how much can be charged and when.

Importantly, there is a legal term called “in duplum”in our law.Basically, it means that the additional legal charges, collection fees, service fees, interest etc. cannot exceed the capital amount outstanding.We have all heard horror stories of people who had to pay R80k’s legal fees to settle a R10k loan… that should NOT happen!If you owe R10k, then the interest and collections charges cannot exceed R10k!

One option here is to attempt to negotiate a reduced settlement amount for the final settlement of the account.It is always worth a try to plead poverty and hope thecreditor provider is keen to get back something rather than nothing.If you successfully negotiate a more favourable settlement amount, make sure to get it in writing that the amount that you pay fully services the entire loan –otherwise, you might pay now, only for them to come up with a new story later on.

Once you have determined the outstanding amount you have to pay to settle the debt, then you must pay this amount before the credit provider will remove the adverse listing.If you want to speed up the process, you can demand a “paid-up”letter and submit it to the credit bureaus yourself (as described above).

Errors on your Credit Report

Once ANY debt has been settled, your record should reflect that the account has been “paid up”and the Credit Bureaus should be notified.Sometimes, there can be problems with the credit provider executing these steps and, as a result,the credit bureaus have incorrect information. That’s right, administrative errorscould prevent you from getting vehicle finance.

Check each of your accounts where you believe problems exist, then contact the credit provider or debt collection agency for a “paid-up letter”. You can then raise a query or dispute with the credit bureaus where the law stipulates that they have 20 days to process and update their records. This will then help in your application for vehicle finance.

DIY Credit Score Fix vs Using the Experts

When you contact the credit provider to discuss your account in arrears, it can be intimidating – the legal jargon, especially, takes time to understand. In South Africa, we have several pieces of legislation that exist to protect consumers, but few people know their rights… or at least know the law well enough to exercise them properly. Cars.co.za has partnered with a company called MaxLaw™ Credit Legal, whichcan give you access to specialist legal advice on this subject.

MaxLaw can provide legal assistance with judgments, admin orders, garnishee orders, defaults and those under debt review. They have access to a panel of expert attorneys and decision-makers at numerous financial institutions to ensure that Cars.co.za users always get the best advice and help in a time and cost-saving manner. MaxLaw charges a flat monthly fee, R710, for their services. Note, however, thatproblems with your credit report may take months to rectify.

Related content:

The Dark Side of Debt Review

All Options for Financing your Car

The Problem with Living Debt-Free

Rent to Own Financing & Blacklisting

How To Buy ACar When You’re Blacklisted