The truth about being ‘blacklisted’

There is nothing in the National Credit Act about blacklisting. The term has been used to explain to consumers what having adverse classifications means. 

The classification relates to consumer behaviour or action taken against a consumer that includes: payment default, slow-paying, absconding from paying, or not contactable. It also includes notification that a consumer has been handed over for collection or recovery, legal action, or write-off. 

Often consumers think they are only listed at the credit bureau if they have an adverse classification. That is not true. A credit bureau must list all consumers if they apply for credit, whether it was granted or not. All the credit agreements you’ve been party to must be listed, the pattern of payment, any default under a credit agreement, or a debt review application.

Credit bureaus, such as TransUnion, one of the largest credit bureaus in SA, hold positive and negative data, the combination of which has proved beneficial in predicting the future behaviour of consumers.

Your professional or business history, including termination of employment and related matters, are listed, as well as your identity information, past and current address, marital status, family relationships and more.

TransUnion says a court judgment, for example — where a court issues an instruction to you to pay an outstanding amount — will remain on your credit report for five years. If you pay the full amount owed before that time, the judgment will be removed from your credit report as soon as the credit bureau receives either proof of payment from the credit provider or a valid court order rescinding the judgment.

If you don’t pay your account and the credit provider takes action against you, such as sending you a letter of final demand, or if you continually pay your accounts late, for example, a credit provider could have you classified as a late or tardy payer. Both these classifications remain on your credit report for one year. If you pay the full amount owed before that time, the information will be removed from your credit report as soon as the credit bureau receives proof of payment from the credit provider.

A sequestration order remains on your credit report for five years, or until a rehabilitation order is granted. A rehabilitation order will continue to reflect on your credit report for a further five years.

If you have applied to be placed under administration, this will remain on your credit report for five years or until the administration order is rescinded by a court.

Under debt review, you will be listed as being under voluntary debt restructuring. This will be removed once all debts are settled and you receive a clearance certificate, or a form 19, from a debt counsellor. The listing can be removed even if you still have a bond to repay. On receiving the form 19, the credit bureau must expunge from its records that the consumer was subject to the debt review as well as any adverse classification. This means you start with a fresh credit record. 

If you are not over-indebted and want to increase your credit rating, pay your debt on time, every month, making sure you pay the correct instalment. If you have an overdue or unpaid debt, pay it off as soon as possible. 

You can’t rewrite your credit history or remove any adverse records without receiving a form 19, but you can start rectifying your situation for a better credit future. Ignoring the problem will not make it go away, nor will it make your future better. You need to take that first step today.

This article was paid for by the Debt Counselling Group SA (DCGSA).