Increasingly savvy South African consumers are sensibly shopping around for the best credit deals in order to get the best interest rate available save a great many rands over the term of the loan contract.
“It’s a strategy that makes sound business sense,” says Sharon Coppola, legal risk and compliance executive at information services group Experian SA. Coppola cautions that growing misperceptions over the frequency of inquiries is tending to deter consumers from clinching the best credit deal.
“It’s a myth that credit shopping expeditions count against you when the risk you present as a borrower is assessed by the credit bureaus and the credit grantors. Indeed, shopping around is not predictive of a default.
“On the contrary, a consumer shopping around for the best deal is actually behaving prudently; it should be in his/her favour.”
Coppola is weary of those that place too great an emphasis on the “shopping around” variable, pointing out that the host of factors contributing to a risk assessment need each to be weighted in terms of the credit-worthiness of the borrower a year hence.
She suggests that a reason for the “shopping around” criterion having been pinpointed on more occasions than warranted is that each inquiry is registered in real time with the credit bureaus within seconds of it having been made. “The data is therefore readily and conveniently available.”
Coppola points out that assessing the importance of predictive variables has little to do with the nature of the consumer’s inquiry and its frequency; it’s about how predictive that variable is in trying to determine future behaviour.
In other words: “Over the next 12 months, what is the likelihood that you will or will not pay me? To answer the question reliably, we examine those factors that are good indicators of your behaviour.
Coppola stresses that “shopping around” is only a small component of the overall picture. And it is being accorded less and less weight over time because it is being found to be of only minor predictive value.
To access your Experian credit report online and sign-up to receive credit report updates by sms and email, please visit www.creditexpert.co.za . For queries on your Experian credit report please contact Experian Consumer Relations on 0861 10 56 65.
Experian South Africa
011 799 3400
+27 11 506-7333
Experian is the leading global information services company, providing data and analytical tools to clients around the world. The Group helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended 31 March 2012 was US$4.5 billion. Experian employs approximately 17,000 people in 44 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
For more information, visit http://www.experianplc.com .