What does it mean to be blacklisted? [Video]
18 January 2016
To be blacklisted means that you have a track record of not paying your accounts and meeting your financial obligations, getting you into debt. Being blacklisted reduces the chances of you obtaining credit in the future.
When you apply for a loan, the lender is legally obliged to check your credit history – a blacklisting will show that you are likely to be a liability in terms of repayment.
Unfortunately, once you have been blacklisted there is no ‘quick fix’ for regaining a clean record. Even if you settle your outstanding debts, your credit profile will be tainted. It sometimes can take as long as five years for you to be cleared.
Blacklisting is quite a general term, and in fact there are several ways that you can find yourself blacklisted. These include:
Being in arrears
If you fall behind on scheduled payments, then you are said to be in ‘arrears’. While legal action may not be launched immediately if you miss a scheduled payment, should you continue to do so it will definitely be instituted. Some credit providers will allow you to make alternative payment arrangements if you start to fall behind on payments.
When you are in arrears you are in default of your credit agreement. This could lead to you having a default listing on your Credit Bureau record.
The impact of this is that you may not be granted any other credit for at least two years. However, there is still the opportunity to negotiate a repayment plan.
A high court judgement on failure to make payments is usually for amounts of R400 000 and more. For amounts less than R400 000, judgements are usually issued by the magistrates’ court and these can be rescinded if you pay off the debt.
Even if you pay off the debt after judgement, your credit record will be marked with a judgement for up to five years. Credit providers will regard a judgement as very high risk, greatly diminishing your chances of getting credit again.
If you have an outstanding judgement, then it will be removed from your credit profile after five years. However it will remain active for a period of thirty years. In essence this means that a credit provider can hold you liable for your debt for thirty years.