Most of their knowledge stems from their own personal experiences, but credit is much more than that. This is why we will be looking at credit and its impact on the economy.
What is credit?The word "credit" can be described as the trust between a lender, the person giving the money, and a borrower, the person taking the money, in which the borrower agrees to pay back the money at a later stage with interest. But credit is far more than just that.
In an article published on Cape Business News, Annelene Dippenaar states that "credit bureaus play an important part in supporting financial inclusion and economic growth by making credit and services accessible to more people, enabling lenders and businesses to reduce risks associated with lending and promote responsible lending." You may be asking, "But how?"
Credit on the larger scaleAn increase in credit being approved results in an increase in spending. This is important for South Africa as a developing country. Increased spending leads to a higher Gross Domestic Product (GDP). GDP is a measure of a country's economic size and health during a period.
The role of credit bureaus in South AfricaAs mentioned earlier, lending is an important component of the economy in developing countries, including South Africa, as it provides access to finance to improve our lives and those of our families. It does, however, come with a clearly defined set of processes, including applications that look at affordability and creditworthiness.
Credit bureaus in South Africa are considered an essential player in the lending landscape as they collect personal, credit and contact information on consumers. They then make this information available to lenders in order to determine a consumer's risk (indicated by their credit score), their creditworthiness (based on their credit history, payment behaviour and information) and their affordability.
In doing so, credit bureaus in South Africa help the process of accessing credit for individuals and also promotes responsible lending.
For more information on credit bureaus, watch our "Know your bureau" video here: https://www.experian.co.za/legal/trust-centre/consumer-trust-centre
Get you unlimited free full credit report and credit score at Experian's www.mycreditcheck.co.za