Why Credit Assessment Makes Debt Collection Easier

In a day and age where thousands of consumers are inundated with bad credit in South Africa, it is important that credit providers take the necessary steps to ensure that they do not offer credit to anyone unless they perform a credit assessment on that person’s ability to repay his debt.

A simple measure that credit providers can use to ensure that debtors have the ability to repay debit is to analyse the consumer’s three month bank statements and three month payslip statements. It is the creditors responsibility to work out whether or not the debtor will be able to pay the debt in the required time frame. The credit assessment is also necessary as many debtors find themselves paying a monthly figure that is not even able to satisfy the monthly interest attached to the debt. A credit assessment is often able to provide the creditor with the information required to bypass such a situation.

A credit assessment is important because it allows the creditor to work out the allocatable income of the debtor. It will also highlight any maintenance that the debtor is required to pay, making those particular funds unattainable. A creditor is also able to  view and analyse any of the debtors current debts, debt orders and obligations.

This is all done before providing the debtor with the relevant credit information, disclosing the interest payable on the credit, a proposed repayment scheme, the proposed initiation fee as well as recommendations towards credit insurance. This will allow the debtor to understand the great responsibility that they are undertaking . If a debtor feels that he is at all aggrieved he may contact the creditor to resolve the situation or contact the National Credit Regulator.

All creditors must ensure that they fulfill the assessment requirements. This will not only protect the consumer, but it will also in turn protect the creditor’s interests too.