Being ‘blacklisted’ is a bigger deal than most people think, and the consequences also last longer than most would guess.
This is a big statement, but is true: Understanding ‘blacklisting’ (and credit restrictions) could change your life.
That’s right. It’s that important. Now, let’s back up that statement and tell you everything you need to know.
Blacklisted in South Africa
In South Africa’s credit industry, the term ‘blacklisted’ is used to refer to individuals who have a bad credit score.
There isn’t an official blacklist that people get added to or removed from. Instead, someone’s ‘blacklisted’ status varies depending on the credit behaviour and credit score.
In effect, when someone regularly misses payments, pays late, or maxes out their credit, they indicate that they might not repay their debt in the future. The result? A weak credit score and lenders that don’t want to hand out money.
📝 Note: you can replace ‘is blacklisted’ with ‘has restricted credit access’. It’s more accurate.
Here’s why it is important to understand the process and consequences of ‘blacklisting’:
- It impacts credit access.
- Can have an effect on job and rental applications.
- Credit restrictions (or ‘blacklisting’) take forever to repair.
Understanding the subject could mean avoiding some of its negative consequences.
A good way to avoid being ‘blacklisted’ is to improve your credit score.
Here are two posts that can help:
- How to check if you are blacklisted
- What is a good credit score in South Africa?
- How to build a strong credit score
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How long does it take to be blacklisted?
It is possible to get ‘blacklisted’ within a few months. In South Africa, it can take as little as three missed payments or defaulting on a debt for a creditor to report negative information to a credit bureau, which may lead to being ‘blacklisted’.
That’s pretty fast. Let’s look at the ‘blacklisting’ procedure to explain why this is the case.
- A consumer misses their debt repayment(s), pays late, or only partially repays their instalment.
- A creditor reports negative information to a credit bureau.
- The credit bureau records this information on the person’s credit report.
- Negative listings hurt the person’s credit score and add up over time (negative information could last up to five years).
- Lenders, realtors, employers, and others see negative credit behaviour as a sign of risk and choose not to approve loans, do business, or work with the person.
That is how someone gets ‘blacklisted’.
Timeframe for creditors to report negative information to credit bureaus
Generally, credit providers must report information to credit bureaus within 7 days of the due date.
It’s worth noting that each creditor has their own way of working. Some report incidents more frequently, while others might only report information every 30 days.
To be safe, try not to miss any payments, and if you do, get it fixed as soon as possible. Preferably within 7 days of the due date.
Factors that can lead to blacklisting:
- Missing payments on credit accounts
- Defaulting on loans
- Receiving court judgements for unpaid debt
- Failing to pay utility bills
- Failing to pay tax bills
- A history of late- or non-payments (on credit accounts)
- Applying for too much credit at once
- Having a high level of outstanding debt
- A history of returned payments
- Any fraudulent activity
- Failing to honour a debt restructuring or payment plan arrangement with a creditor.
Now you know how someone gets blacklisted in South Africa. Let’s look at the duration of ‘blacklisting’ on a credit record next.
How long do you stay blacklisted?
In South Africa, negative information can remain on an individual’s credit report for up to five years, which means that a person can potentially stay blacklisted for this duration. Furthermore, if the ‘blacklisted’ individual doesn’t improve their credit behaviour (or credit score), they could remain ‘blacklisted’ indefinitely.
The duration of ‘blacklisting’ boils down to a couple of things:
- The type of information that was reported.
- Specific credit bureau policies.
- The individual’s ongoing credit behaviour.
Negative information on a credit report (missed payments, defaults, and court judgments) typically reflects for a period of 5 years from the initial reporting date.
So a missed payment in June 2023 may still have a negative impact in June 2028.
Other information like insolvency or sequestration may stick around even longer. Insolvency could stay on your credit report for up to 10 years.
Earlier in this post, we briefly touched on why this all matters. Now, we’re going to take a closer look at the implications.
What happens if you are blacklisted
- Restricted credit access
- Higher interest rates
- Difficulty securing housing
- Challenging employment prospects
- Long-lasting negative impact on creditworthiness.
Restricted credit access
Makes it harder to obtain credit (loans)
Higher interest rates
Approved applications come with higher-interest rates (which cost more money long term)
Difficulty securing housing
Landlords and property managers are generally more reluctant to accept tenants with poor credit records. Making it harder to secure housing.
Challenging employment prospects
Some employers may also check a person’s credit record as part of the hiring process, particularly if the position involves financial responsibilities. Therefore, a bad credit record could make finding employment more challenging.
Long-lasting negative impact on creditworthiness
Previously ‘blacklisted’ consumers may find it difficult to obtain credit or loans in the future. Even after the negative information falls off their credit report. Hurting financial opportunities and long-term goals.
Steps to take if you are blacklisted
Buckle up and get comfortable because this is a long ride.
If your credit score is severely hurt, then it will take a long time to fix.
Here’s what you can do to improve your credit score and undo the ‘blacklisting’:
- Check your credit record (My Score Hero provides free credit reports).
- Pay off your outstanding debts.
- Seek professional assistance (like debt review or debt counselling])
- Rebuild your credit record by maintaining the following behaviours:
- Pay your bills on time
- Keep your credit utilisation low
- Use credit responsibly
- Apply for credit sparingly
A little help can go a long way if you’re in too deep. Debt counselling (debt review) is a professional service and programme designed to help people that are struggling with debt.
Debt counselling (debt review) helps over-indebted individuals to reduce what they owe each month (making it easier to afford) and combines multiple debts under a single repayment (making it easier to track and pay off). Plus, the service offers other cool benefits like legal protection.
If you’re interested, try our quick online assessment to see if you qualify to reduce your monthly debt instalment so you can start building a stronger credit record and escape being ‘blacklisted’.
Being ‘blacklisted’ sucks.
Try to avoid it.
If it’s too late, do what you need to do to fix it.