In a world where a B Class attracts higher status than a B Com, it is easy to get into uncontrollable debt. If you have been blacklisted, your first move should be to find out who blacklisted you, and to understand the options available to you in getting back on track.
According to the Credit Bureau Monitor (a report compiled by the National Credit Regulator) as of September 2010, 46.3% of the 18,35 million credit active South Africans had “impaired credit records”. (March 2011, www.property24.com)
This figure is alarming, but a deeper look into the blacklisting process in South Africa suggests that the high incidence of impaired credit records could be amplified by the relative ease with which consumers can be blacklisted.
It is very easy to blacklist a consumer according to a post by TransUnion, the company responsible for the ITC credit bureau. The post goes on to explain that “just a summons, whether you go to court or not is enough for the ITC to blacklist”.
In order to find out who blacklisted you, you will need to have an updated list of your creditors (i.e. any institution to which you owe money for goods/ services obtained on credit). These companies send their payment record to the credit bureaus every month. If one month’s payment is missed, it will reflect on your record. However, you will generally not be blacklisted for one missed payment. There are various levels of blacklisting, determined by the degree of severity of your failure to settle your debt.
An account which has not been paid (i.e. is in arrears) for 3 months or more will get you blacklisted, as the monthly payment records sent to the credit bureaus will start showing a red flag at this stage. At this point, a debt collector should contact you to inform you of the debt you owe. If your debt remains unsettled, you will then be at risk of obtaining a judgement against you. A judgement remains on your record for 5 years, and makes it almost impossible to apply for credit during this time. (May 2011, www.lucidliving.co.za)
Despite the presence of the ITC credit bureau, the National Credit Regulator, the Credit Bureau Monitor and other equivalent bodies, there does not appear to be one hierarchical structure and or process with regards to understanding who is blacklisting you. This appears to be slightly less important, however, as compared to actually knowing your credit rating status at all times. Numerous companies and online agencies offer credit reports – however the sheer number of companies offering this service suggests that not all of these are as genuine or thorough as others.
According to an article in the Pretoria News, consumers are entitled to a free credit report from the credit bureau once a year. This should be taken full advantage of in keeping on top of your financial status. (March 2011, www.iol.co.za) This can be obtained by contacting TransUnion (0861 482 482), Experian (0861 105 665) or The Credit Information Ombud (0861 662 837).
Another very dangerous off-shoot of SA’s high incidence of blacklisting is the absolute surge in companies offering credit to blacklisted consumers. While this may appear as a shimmering oasis in a desert of debt, these companies should be avoided at all costs. The only way out of debt is to dig out of it, one payment at a time. Obtaining more debt to cover existing debt just gets dangerous. Numerous legitimate debt counselling options are available, both through banks and through credit bureaus.
Being blacklisted does not need to be the scary, socially embarrassing nightmare we imagine it to be. Become a financially savvy consumer by knowing your rights, keeping up to date with your payments, and by knowing your credit standing at any point in time.
Peter Setou of the NCR says “the biggest mistake people make is to believe if they ignore phone calls and letters the problem will go away.” (Mar 2011, www.property24.com). If you have obtained an impaired credit rating, find out who blacklisted you, and if you can, contact the creditor directly to discuss a payment plan. Failing this, contact your bank or credit bureau about debt counselling, and get back on track as soon as possible!