The question often arises as to whether information can be removed from a bureau after the debt to which that information relates, has been paid in full.
Credit Bureaus are regulated by various laws, codes, policies and constitutions. The Credit Provider Association’s (“CPA”) constitution and the National Credit Act (NCA) specifically deals with the question raised above.
Section 14.6.8 of the CPA Constitution prohibits the removal of data even though the data refers to a debt that has been paid in full. In the event of a consumer having defaulted on payment and subsequently having settled the outstanding debt, the default information can only be updated to “Paid in full”. However, the fact that payment has been missed in the past will remain on the consumer’s profile.
Furthermore, section 70(d)(d) of the National Credit Act (NCA) requires that credit bureaus “retain consumer credit information reported to it for the prescribed period, irrespective of whether that information reflects positively or negatively on the consumer”.
Regulation 17(1) of the General Regulations to the NCA further states that “consumer credit information may be displayed and used for credit scoring or credit assessment for a maximum period as indicated”.
The maximum retention periods are as follows:
|Categories of Consumer Credit Information||Description||Period for which Information must be retained from date of commencement of the event|
|1.||Details and results of disputes lodged by consumers.||Number and nature of complaints lodged and whether complaint was rejected.No information may be displayed on complaints that were upheld.||18 months|
|2.||Enquiries||Number of enquiries made on a consumer’s record, including the name of the entity / person who made the enquiry and a contact person if available.||2 years|
|3.||Payment Profile||Factual information pertaining to the payment profile of the consumer.||5 years|
|4.||Adverse classifications of consumer behaviour||Subjective qualifications of consumer behaviour.||1 year|
|5.||Adverse classifications of enforcement actions||Classifications related to enforcement action taken by a credit provider||2 years|
|6.||Debt Restructuring||As per section 86 of the Act, an order given by the Court or Tribunal.||Until a clearance certificate is issued|
|7.||Civil court judgments||Civil court judgments including default judgment.||The earlier of 5 years or until the judgment is rescinded by a court or abandoned by the credit provider in terms of section 86 of the Magistrate’s Court Act, 32 of 1944|
|8.||Administration Orders||As per the court order.||The earlier of 10 years or until order is rescinded by a court|
|9.||Sequestrations||As per the court order.||The earlier of 10 years or until rehabilitation order is granted|
|10.||Liquidations||As per the court order.||Unlimited period|
|11.||Rehabilitation Orders||As per the court order.||5 years|
|12.||Other information||Any information not included in a category above||2 years|
One of the core functions of a credit bureau is to provide information to credit grantors that assist with the credit granting decision making process. Specifically, the information supplied has predictive value for credit risk and affordability assessments and therefor plays a valuable role in the decision making process.
It is imperative that the information that is being considered during the credit application is as complete as possible and it should be factually correct due to the predicative nature of adverse information. Should the information be removed prior to the retention period coming to an end, it will negatively influence the information available to the credit grantor when making credit risk assessments and could lead to an increase in the granting of undesirable credit.
Information that is factually correct must therefore remain on a consumer’s record for the full data retention period.
About the Writer: Annelene Dippenaar is an admitted attorney, practicing since 2006. She has advised various clients, including registered banks, credit providers and other listed companies on the National Credit Act 34 of 2005. Since 2010 she has been employed by Compuscan, a registered credit bureau, as legal advisor and compliance officer. Annelene obtained a BA. (Law), LLB and LLM at the University of Stellenbosch and is currently writing her doctors thesis.
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