The National Credit Regulator (NCR) cautioned against bogus credit providers, reiterating that only companies registered with the regulator can provide loans to the public.
Managing Director, Namesa Motshegare, says these unscrupulous operators advertise via text or email and charge customers upfront fees – with which they then disappear and no loans are given.
George Roussos, chief operating officer of African Bank, said it was unfortunate that consumers were getting ripped off when they were already in a vulnerable financial situation. He pointed out that it was illegal to take money before giving someone a loan.
“There are a lot of people in dire financial straits right now, due to the Covid-19 pandemic and the lockdown. Unfortunately, this is fertile ground for opportunists and bogus credit providers, ”he said.
Roussos added that online ads that promise to rehabilitate over-indebted consumers for a fee are often scams as well.
“There are no quick fixes to bad debt or a bad credit history. No unauthorized company, person or lawyer can remove negative data from credit bureau records, no matter how much you pay for it, ”he said.
He advised people considering taking out a loan from a credit institution or having their credit report rehabilitated to:
- Check the credentials of the credit provider. It must be a legitimate business registered with the NCR.
- Check the credentials of any business or person claiming to work for a credit bureau – phone the business directly and check for reassurance.
- Be aware that legitimate credit providers do not advertise or communicate with customers on social media or WhatsApp without disclosing their credentials.
6 tips for applying / using credit the right way:
1. Check your credit report and credit score (you can get a free credit report with African Bank even if you are not a customer). If you want to manage credit well and avoid problems, it’s important to know how your spending and repayment behavior affects your credit score report.
2. Find out what type of loan and for what amount you qualify from a reputable financial service provider.
3. Think carefully about the reasons why you want to get the loan. Having a good credit history shouldn’t be a gateway to frivolous loans. A loan is a significant financial commitment.
4. Always look for a loan that is priced in accordance with regulations set by the NCR and make sure that the full cost of credit (which includes interest, fees, and possibly credit life insurance) is disclosed.
5. Avoid abusing credit. Even if the lenders give you credit, you don’t have to take the full amount. Take the amount needed to meet the need or problem you are trying to solve.
6. Action any damage to your credit report. Your credit report could show that you are behind on payments when in fact you know you are not, or that a criminal could steal your information and accumulate bad debts in your name. Take immediate action to fix anything that is hurting your creditworthiness.
In agreement with NCR, Roussos said anyone who is scammed by a bogus credit provider should initiate criminal proceedings at SAPS.
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