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So You've been Blacklisted. Now What?

Credit • 30 August 2018
SO YOU’VE BEEN BLACKLISTED? ALL YOU NEED TO KNOW

Many people only check their credit reports when it is too late. Often, they cannot understand why their credit application to buy a house or car, or even just to open a retail store account, has been turned down.  If you are blacklisted the chances that a credit provider will extend you further lines of credit is highly unlikely. Their basic reason for rejecting your credit application is that if you were unable to pay your previous debts, so they are not confident that you will be able to service this new debt if it is granted. You are what the credit provider would consider ‘high risk’ and unless you get your credit history back on track you will keep struggling to get any sort of future credit.

Although the decision of whether or not to grant credit does not lie with the credit bureau which compiles your credit report, this report is used by potential credit providers every time you apply for a loan, a line of credit or to want open an account. Regular checks on your credit score can help you avoid a disappointing surprise.  We’ve put together some of the important things you should know about dealing with being blacklisted.

What does it mean to be Blacklisted?

 Your credit report is a record of your payment behaviour. It tracks all your accounts and indicates where, over a period of two years, you have missed payments or gone into arrears on an account. The term ‘blacklisted’ is quite general and can apply to a number of situations a credit consumer finds themselves in. Currently, the term is used loosely to describe a debtor’s inability to meet payment obligations to creditors. It could arise from an account being in arrears to possibly having a court judgment against you.

How long will Blacklisting negatively affect your credit record?

You will remain blacklisted in South Africa for as long as the debt is not paid. Once you have been blacklisted, it is important to note that even after you settle your outstanding debts, your credit profile is tainted with the blacklisting for anywhere from two to five years.

Your credit report contains all the positive, as well as negative information about your payment behaviour. It also includes information which may, or may not be considered negative by a credit provider and some of this information may remain on your credit report for a longer or shorter period. A court judgment, for example – where a court issues an instruction to you to pay an outstanding amount – will remain on your credit report for five years. If you pay the full amount owed before that time, the judgment will be removed from your credit report as soon as the credit bureau receives either proof of payment from the credit provider or a valid court order rescinding the judgment.

It is therefore vitally important that consumers who have had judgments against them and have paid the outstanding judgment debt, check their credit reports to ensure that this negative information no longer remains on their credit record.

 Consequences of Being Blacklisted

Not being able to borrow money or open an account is only one of your concerns if you have been blacklisted. Your credit record is not only used to judge your creditworthiness but is often also used as a test of your general reliability and adherence to the requirements of life and work. For this reason, you may also be subject to a credit check when:

  • You enrol your child in a school because they want to be assured that you will pay their fees on time.
  • You try to rent a property because the owner or agent will want to be certain you will pay your rent.
  • When you apply for a job because your potential employer will want to know whether you are a reliable and trustworthy individual. In some cases, this translates into running a credit check against your name – especially in companies that deal with other people’s money or personal information like banks or legal firms. Such organisations may even run a credit check on your spouse.! Other organisations may check your credit record to find out whether any garnishee orders are in place against you, which they will have to honour.

At LoanFinder, we believe that our member not only needs assistance in getting themselves out of the debt trap but also need to be educated and supported to avoid serious negative debt management consequences such as blacklisting. Through our 4-in-1 Plan, members have regular access to their credit reports, enjoy sound financial counseling and advice and can be assisted with debt management services such as debt counseling. Apply with us today to make sure you never get blacklisted again. Contact Us now for more information on Debt assistance.