Managing your credit during financial hardship, COVID -19

The novel pandemic COVID-19’s lockdown has meant future income uncertainties for most SADC countries and Lesotho recently recorded its first case, meaning it is not an exception at the moment.

kabelo (2)
Mr Kabelo Ramaselwana

According to TransUnion Batswana consumers are worried about how they will pay for necessities such as rent or home loans.

“As tough as the situation might be, there are steps one can take to ensure that their credit profile remains clean for when they would eventually like to borrow money in the future”, said TransUnion.

TransUnion issued a statement on the case of Botswana on 14 May, 2020. The statement highlighted that Botswana slowly starting to ease out of the lockdown, millions of consumers and businesses are still facing some tough financial choices, but it’s vital that people stay in control of their credit through this stressful time.

According to the Bank of Botswana’s latest statistics as of January 2020, Botswana households’ indebtedness levels rose from BWP 35.2bn in January 2019 to BWP40.3bn in January 2020, a 9% year on year growth.

Consumer debt balances have increased sharply in the past 12 months, as growing numbers of consumers turn to unsecured credit, including credit cards and personal loans and overdraft, to cover everyday expenses. With the report showing delinquencies on the rise, many people are struggling to make repayments on their debts.

“If you’re going to struggle to pay your bills in the coming months, it’s critical to talk to your lenders upfront”, says Mr Kabelo Ramaselwana, chief executive officer at TransUnion.

The statement illustrates three ways to manage credit through the COVID-19 pandemic, and beyond.

Protect your credit profile

As income streams shrink in the coming months, people may find themselves having to use their credit cards more, or even dip into their home loans for refinancing. The important thing is to pay all of your bills on time if you can. Paying on time is one of the biggest factors that affect your credit profile.

It’s even more vital than usual to protect your credit profile during tough times, because access to credit can often help you get through the rough patches.

Talk to your lenders

If money is tight and you’re worried you’re going to miss a payment or two, it’s best to contact your lenders before the payment is due. You can explain your situation and ask whether they can offer any assistance.

Consider contacting your bank or credit issuer if you’re affected by the COVID-19 pandemic. You may qualify for some leeway. Several Botswana banks have already announced payment holidays to help consumers and small businesses get through this time.

Stay in control of your credit health

It’s important to check your credit report to make sure all your account information is correct. You can get your credit report from several information providers like TransUnion. That way, if you contact your lenders to discuss your financial situation, they’ll have correct data to work with.

“We know many people are feeling anxious about their finances during this challenging time. Organising your credit information and maintaining communication with your lenders are two ways you can help stay in control of your credit health during times of uncertainty,” concluded Ramaselwana.

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