If you make use of credit or a loan and then run into problems repaying what you’ve borrowed, you stand the risk of being blacklisted. This means that a creditor you haven’t repaid or an attorney has reported your bad debt to a credit bureau.
Once this has happened, banks and other financial institutions are unlikely to grant you loans – or finance for a car or home – regardless of why you were blacklisted or how your circumstances have changed in the mean time. The blacklisting will remain in effect for two years or, in some cases, even for five years.
How can you tell if you’re blacklisted?
To find out if you’re blacklisted, request your credit record from both TransUnion Credit Bureau (Pty) Ltd and Experian Ltd. It’s important to check with both bureaus because they have different business subscribers and may hold different credit records.
Until the 1980s, credit bureaus kept records only of bad credit. Nowadays, the records held by credit bureaus include both positive and negative financial data about individuals.
Ways to avoid being blacklisted
Your chances of avoiding a negative credit rating depend on which of three situations you’re in:
- debt collectors are still contacting you
- you’re already considered to have defaulted
- a legal judgement has been brought against you.
Debt collectors are still contacting you
If you’re still being contacted by debt collectors, it’s not too late to settle your debt without legal action being taken against you. Once you settle the debt in full, get the creditor or debt collection agency to issue a letter stating you’ve paid your debt. Then submit this to the credit bureaus so that they can update your records.
You’re considered to have defaulted
Being “in default” is the term used if you’ve failed to pay a debt and the credit provider feels that the chance of recovering payment from you is low. In this case, your debt may be written off. However, a poor credit rating will continue to reflect in your credit record for two years.
A judgement has been brought against you
If a legal judgement is brought against you, you could receive a court order enforcing payment of your debt in installments, or an order to seize property and/or assets as payment.
For amounts below R 100,000, judgements may be rescinded. To have a court order rescinded, you need to provide a letter from your creditor stating that you’ve paid your debt in full. However, creditors aren’t legally obligated to provide this letter and may refuse to do so. Even when paid off and an associated judgement has been rescinded, the bad debt will reflect on your credit record for up to five years.
What you can do if you’ve been blacklisted
If you’re struggling to pay your debts, a credit counsellor may help you devise a realistic repayment plan. The counsellor can also negotiate a payment schedule with your creditors on your behalf.
The National Debt Mediation Association is a non-profit organisation that can also assist with negotiating payment terms. If you’ve missed payments on a large asset like your house, it can help you protect the asset from repossession.
If you’ve requested your credit record and don’t agree with the information recorded, you can submit a form, along with evidence to support your case, and your profile will be updated within 20 working days. If you’re not happy with the changes to your credit rating, you can contact the Credit Ombud for free assistance.
Getting a loan if you’re blacklisted
Once you have a bad credit rating, it’s unlikely you’ll be able to secure a loan from a bank. However, some options for securing finance are still open to you.
With Lamna, you can secure a short-term, asset-based loan immediately. You use the value of an asset, like jewellery or a paid-up vehicle in your name, as surety for a loan. Once you’ve repaid the loan, the asset is returned to you in the same condition it was in when it left you.
For more information about getting a loan in South Africa if you’ve been blacklisted, contact us on 086 111 2866 or simply complete and submit our online application form to apply for a loan now.
ILLUSTRATIVE EXAMPLE
Client borrows R10,000 for 90 days.
Loan Amount | Repayment Period | Monthly Interest | Total Cost of Loan | Initiation Fee | Monthly Fee | APR |
|---|---|---|---|---|---|---|
R10 000 | 3 months | R500.00 | R2 914.50 | R1 207.50 | R569.00 | 60% |
Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.