South Africa’s credit health shows improvement

August 6, 2015 2:52 pm0 comments

credit-profile-2JOHANNESBURG, (CAJ News) – TRANSUNION, a global leader in credit and information management, has announced a marginal improvement in consumer credit health for South Africans in the second quarter and the first half of the year.

This is an improvement from the South African Consumer Credit Index (CCI) report 2014.

In addition, new account defaults and distressed borrowing levels have seen improvement.

However, while the report shows a number of positive aspects, on-going economic challenges indicate that consumers are still under strain and will continue to feel the pressure in the second half of the year.

The CCI is a unique indicator of consumer credit health measuring the ability of consumers to service existing credit obligations within the constraints of their monthly household budget. It is based on a 100-point scale, where 50.0 is the break-even level between improvement and deterioration of credit health.

“Any number above 50 in the context of the CCI means that consumer credit health has improved over the past year. However, a number under 55 is considered only a moderate improvement. Given that the Q2 CCI is the same as Q1, we can ascertain that credit health has stabilised for the time being,” explained Owen Sorour, Senior Vice President, Analytic and Decisioning Solutions at TransUnion.

He said the improvement could be attributed in large part to more conservative lending from credit providers.

Sorour said they had seen a drop in the number of credit applications and an increase in the rate of declined applications, and these more prudent lending requirements by providers were paying off.

“However, despite this promising trend, the future for consumers is not optimistic. In the past few months the exchange rate and instability of the Rand have resulted in price increases, and a recent interest rate hike will further contribute to decreased cash flow,” he added.

– CAJ News

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