ITC Clearance Terminology
Many consumers who’ve struggled with debt in the past find it frustrating to restore their credit reports and rebuild their credit scores. ITC Clearance is an excellent solution if you’re in the right place in your life and can better manage financial obligations. Understanding ITC Clearance Terminology gives you an advantage when you’re ready to clear your name. Read through our guide below:
ITC Clearance: This refers to having your credit record cleared from debt flags, defaults, and negative listings. It works by submitting your Debt Clearance Certificate (or certificate of debt repayment) to Credit Bureaus that include ITC (now called TransUnion).
Debt: Any money that you owe to someone else or any lender/institute is referred to as debt. Good Debt examples include paying off a mortgage towards a home, while bad debt includes store cards or credit cards with high interest rates.
Debt Flag: This is a marker that shows up on your credit report, indicating that you’re undergoing Debt Review. This flag deters lenders from entering into loan agreements with you and should be removed shortly after you complete Debt Review and receive your Clearance Certificate.
Debt Clearance Certificate: Receiving your Debt Clearance Certificate comes after completing the Debt Review Process successfully. It shows that you’ve paid all your existing debts off and helps to restore your creditworthiness.
Debt Review/Debt Counselling: Debt Review, sometimes referred to as Debt Counselling, is a formal process that helps over-indebted consumers repay their debts. All debts owed are considered against the affordability of the individual, and then a new repayment plan is drawn up that matches what can be managed more reasonably.
Credit: The money that is borrowed by a bank or financial institute/lender. Credit is given through an agreement between the creditor and debtor, and a plan is drawn up (usually including interest) so that the lender can repay the money owed over an agreed-upon period.
Creditor: The banks, credit card companies, stores, and/or financial institutions that loan you money or allow you to purchase goods or services on credit are referred to as creditors. You are in debt to your creditors.
Credit Bureau: These are agencies that collect, organize, and store your credit data from credit providers and lenders. These reports are sold to creditors who wish to establish your creditworthiness before entering into a loan agreement with you.
Interest Rate: The proportion or percentage of the loan amount you have borrowed. This is the amount that lenders charge to borrowers as a charge for borrowing money or accessing an account. Interest rates vary and there are different types of interest rates.
NCR (National Credit Regulator): This is a regulatory body that protects South African lenders and monitors the compliance of debt counsellors and credit providers. Credit providers should register with the NCR to practice responsible lending.