Credit Amnesty for all!!! But is this a good or bad idea?

This is a serious dilemma facing lending institutions, as the implications could be far reaching if credit amnesty is approved by Cabinet as proposed by the Department of Trade and Industry (DTI) and the National Credit Regulator (NCR).

This is an amnesty decision which could see the light of day before the end of the year. In a way it may be understandable if this is a decision by Government to put more consumers in a position to purchase property.

For “some” consumers this is a long awaited, welcome reprieve. Consumers with bad debt management records will have their records erased. The result is that consumers will be able to start afresh with their credit records.

Rudi Botha, Chairman of Betterbond, says this will affect about 1.6 million consumers. Within these 1.6 million consumers there is a vast pool of prospective home owners. This will result in revenue for banks, with a risk. But before consumers applaud this proposed move, consider the implications on credit consumers.

Banks could only respond in one way, to protect themselves. We could expect stricter credit criteria and maybe higher deposits required by banks. The Banking Association MD, Cas Coovadia, says banks will increase costs to cover their risk.

It is understandable that banks are heavily opposed to this move as they carry all the risk, and irresponsible borrowers will continue their irresponsible practices without previous records to assist in validating consumers’ credit worthiness.

Mark Seymoor, chairman of Credit Providers Association, also feels erasing records from the Credit Bureau will get the backs up of all credit service institutions.

I echo Rudi Botha's sentiments in genuinely considering purchasing property now – with the favourable interest rates and well priced properties (and almost enough stock) – while you have a positive traceable credit worthy track record.

In the meanwhile, it's good financial practice to own property. Myroof can assist you to fulfill your property requirements and needs.

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