Your questions on blacklisting answered

Is COVID-19 placing a strain on your finances? You're not the only one. Households across the country are feeling the impact. With a bruised economy, South Africans are working second jobs, cutting back costs, and turning to loans to survive until payday. The danger of this debt is that it places you at risk of being blacklisted. Before you sign the dotted line, empower yourself with this important information about blacklisting. 

What does it mean to be blacklisted?

First things first: blacklisting is an outdated term. Previously, credit bureaus only kept negative information about a consumer's credit behaviour. Today, positive information is also recorded which can affect credit applications. 

Blacklisting is instead used informally to indicate that you have a negative credit score or reduced creditworthiness. You can still apply for loans or attempt to open accounts with credit-providing retailers. However, you'd be viewed as a risk and may be less likely to have a successful application. 

How does blacklisting impact you?

If your credit history is blemished, you'll find it challenging to qualify for a range of loans. This can include home loans, vehicle financing, and retail loans at furniture and clothing stores, for example. You'll also struggle to secure cellphone contracts or sign up for an insurance policy. Even if you do qualify, you may end up paying off a loan at a much higher interest rate.

Your credit is a reflection of your reliability. Some schools may check your credit to ensure you can pay fees for your child's education. Your prospective landlord may do a credit check to gauge if you'll be able to consistently pay rent. Some employers will also check your credit history. This is common in financial fields where you may be responsible for handling or managing a company's finances. 

How can you be blacklisted?

You are "blacklisted" if you have a low credit rating or a negative credit history on your credit report. This often occurs if you have a poor relationship with managing your debt. This can include not paying accounts on time, defaulting on payments, or having judgements against your name. This means a court has ordered you to pay an outstanding debt and is reflected in your credit history.

How do you check if you're blacklisted?

There isn't a "blacklist" of any kind. Details about your creditworthiness are contained in your credit profile or report. All South African citizens are entitled to get a free report every year. Your credit report provides details on your accounts and can help you pick up where you're being "red-flagged". 

What can you do if you've been blacklisted?

Remember, being blacklisted or having a poor credit score is nothing to be ashamed of. People from all walks of life can find themselves in this situation. By taking the right steps, you can enhance your credit history.

Check your credit report: After evaluating your credit report, you may find inaccuracies impacting your credit score. You can log a dispute with any of South Africa's active credit bureaus like TransUnion, Compuscan, Experian, or Xpert Decision Systems (XDS).

Talk to your credit provider: If you're unable to make payments, you need to relay this to your credit provider ASAP. They can perhaps negotiate a payment extension or rework the instalments you'll pay each month. 

Consider debt counselling: This will help with budget advice, help you reduce payments, and restructure your debt. 

Don't create further debt: It can be enticing to take on an additional loan to pay off an existing one. This can place you under additional stress and prevent you from overcoming your debt hurdle. 

Work on your budget: By cutting down on unnecessary expenses, you can direct more cash flow towards paying off your debt.

Who can help if you've been blacklisted?

A certified financial advisor has the expertise and experience to help you manage your debt and boost your creditworthiness. They'll help you assess your financial situation, consolidate your debt, and create a financial plan you'll be able to easily follow. They'll also communicate with you regularly to ensure you stay on the right path and assist with any challenges you have along the way.

Creditworthiness ratings and debt are an inevitable part of life. With a trustworthy financial advisor, you can navigate this area without fear. De Lucia Insurance Brokers and Financial Advisors (an authorised financial services provider: FSP 4186) are your go-to experts for financial assistance. Make contact with De Lucia Insurance Brokers and Financial Advisors today or call Tracey-Lee Jordaan directly on 011 975 5911.

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