How do I get a credit record when no-one will give me credit?
You need credit to get credit but you don't want credit, at the end of the day the credit cycle can be confusing and difficult to navigate, but Wendy Knowler is here to help!
The 'got to have credit to get credit’ dilemma
That’s the dilemma people write to me about from time to time, all of them very upset.
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“I’ve made a point of only buying things when I can pay cash and now that I need credit, I’m being penalised for being financially responsible!”
The thing is, lenders want to know that you are good at paying what you owe by the due date, and without a credit record, you are what the industry calls a “thin file”, with little to no credit footprint, i.e. risky to lend money to.
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Earlier this week, I received an email from a mom whose daughter, a golf coach, has returned to SA from a 10-year-stint in the US. Now she’s battling to get credit because of her lack of credit activity in SA all those years.
No one will give her an account or credit card, but she does pay monthly rent and car insurance. What other transactions need to be reflected in her account? I cannot seem to get any information from anyone other than –“ your application has been declined.” It is extremely frustrating.
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I asked Transunion for advice and got this as a reply: "Unfortunately there is little that can be done for a consumer who has not been credit active for a while. A good way to build rapport in credit is the opening of a clothing store account. Irrespective, it would still be the prerogative of the credit provider to extend credit or not and if the consumer has no active credit scoring, then this will hinder the credit provider to validate credit history and the like.”
Then I thought of the company called PayJustNow, started 18 months ago by a bunch of KwaZulu-Natalers, most of whom are now based in Cape Town.
It’s a really interesting, disrupting way of paying things off, something between a store account and a lay-by, and super consumer-friendly.
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You get the product when you make your first of three payments, immediately, and it’s always a three-month deal - three equal payments.
The downside of the lay-by, of course, is you only get the goodies when you’ve paid in full, three to six months later.
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So with PayJustNow, you see that pair of trainers for R1200. You pay R400, you
take the shoes, and then next month and the month after that you pay R400.
No fees, no interest. Brands pay PayJustNow and the consumer gets the win at no cost.
You only pay extra if you don’t make your payment on time.
660 brands have signed up, most of the "Mom and Pop" brands. They signed up their first big fish in December - Cape Union Mart.
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75,000 consumers are using PayJustNow - many of the sign-ups with the company happen after consumers urge them to join.
PayJustNow is processing between 11% and 16% of brands’ turnover, so they carry a lot of clout, and they have a very low default rate.
So I asked PayJustNow CEO Craig Newborn if PayJustNow purchases would reflect on someone’s credit record.
Here’s what he said: “Our purchase behaviours do not show on your credit
profile yet, but they will do in a few month's time as soon as we complete our SACRRA certification. We are scheduled for June certification and yes we
welcome “thin file” people.”
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No-risk travel bookings take off
It took a pandemic and mass global cancellations to force the travel industry to allow consumers to cancel or change their travel bookings without paying penalties or change fees.
Airlines,
travel agencies, and accommodation places are busy introducing the kind of
flexibility into its fares that we would all have loved and appreciated all
these years.
Last month, British Airways (operated by Comair in SA) announced that it has
introduced new booking options, giving customers the flexibility to change the
dates and destination of a booking without any change fee - that’s after
new local airline Lift and FlySafair showed the way.
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“Covid-19 regulations and uncertainty about when these will be eased has caused many travellers to reconsider or cancel their plans,” said BA’s sales and marketing executive, Brian Kitchin.
"Recognising this and to provide customers with peace-of-mind, we’ve introduced full flexibility to book now and make changes later, with no change fee.”
And
this week, Flight Centre, South Africa's largest travel company, announced
that it has expanded its popular Moneyback Guarantee to all its local holiday
packages.
"We expect the significant pent-up demand for local travel to continue
over the next 6 months at least, with customers looking to book their holidays
with flexibility and peace of mind in these highly unusual times,” says
Andrew Stark, Flight Centre's MD of the group’s Middle East and Africa
operations.
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"We listened to our customers to see how we could offer even more flexibility and assurance. Now customers can book any of our South African accommodation deals and if they need to, they are able to cancel their booking for any reason, with just 24 hours’ notice, prior to check-in for a full refund. No questions asked.”
Yeah, about time.
Also this week, leisure and hotel management
company First Group advised consumers to ask these four questions, at least,
before confirming travel bookings:
Here are some examples:
Is there good WiFi and is it included in the rate?
Will there be a holding fee on my credit card (and if so, when it will be released)?
What are the terms of the deposit? Is it refundable, and how much?
What are your cancellation and refund policy?
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Good to know!
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