Paper

The South African Credit Information System

Assessing voluntary information sharing and reciprocity in the Credit Information System
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This presentation provides an overview of the South African Credit Information System, describing the following characteristics:

  • Voluntary information sharing;
  • Application of the principle of reciprocity;
  • Use of sophisticated scoring models;
  • Full-file credit reporting, where both positive and negative information is shared;
  • Fixed and reasonable data retention periods;
  • A legitimate and non-judicial dispute resolution mechanism that resolves disputes between consumers and credit bureaus or their subscribers;
  • The code of conduct within which credit bureaus operate.

The presentation:

  • Identifies the role-players in the South African Credit Information System;
  • Outlines the following functions of the Credit Information System:
    • Improving risk management,
    • Enabling lenders to increase the amount of lending,
    • Reducing default rates,
    • Assisting borrowers in developing credit profiles,
    • Preventing borrowers from becoming over-indebted.
  • Outlines how the system operates;
  • Lists the sources of public and private information.

The presentation concludes by listing the main characteristics of a Credit Information System as follows:

  • Collecting data from various sources;
  • Offering voluntary, extensive full-file information sharing;
  • Having scoring systems that categorize credit applicants into risk classes;
  • Following the principle of reciprocity;
  • Operating within a clearly defined framework of good practice principles;
  • Having mature private credit bureaus that are not subject to statutory limitations.