A blacklist: is a list of people, groups, or countries that are officially shunned or excluded due to behaviour or activities deemed unacceptable in the financial world.
This is not a list you want to be on. What does it mean to be ‘blacklisted’ in the South African context and how do you check whether you are blacklisted?
Let’s find out.
Any lenders that are struggling financially and have outstanding debt, face a strong possibility of being labelled as “blacklisted”. Deemed as someone that creditors should avoid lending to, because of the risk of non-payment that the lender’s credit history represents.
It’s the list no one wants to be on.
Did you know that this contemptible term is now obsolete? In the past credit bureaus used to indicate negative information on someone’s credit report by labelling them as blacklisted.
Today, credit reports now list the good and the bad and provide creditors with more information and provide users with the insight to track and manage their financial health and credit score.
Credit score? Your credit score is a 3-digit snapshot of your financial history.
‘Blacklisted’. The term may no longer be in use, but the effects and stigma linger.
Credit reports now reflect the good and the bad, and you may no longer be labelled as ‘blacklisted’ you sure can still look like someone who should be. To avoid this, it is important to have a healthy credit score and know your status.
How do I check my status?
Your credit report is a statement that records your credit activity and current credit situation. Creditors use this information to determine your financial viability and whether you are a credit liability or an asset.
This means that you can check the health of your credit report to determine whether you have a good or bad credit profile. A bad credit profile could be considered as ‘blacklisted’.
Luckily credit reports can be accessed and viewed rather easily. The process is simple, it requires that you complete a form, you can have access to your credit score or status within minutes.
As your credit report records both the good and the bad, it is essential to know what actions affect your status so you can manage your financial health as best as possible.
Your credit report is an overview of your financial health just like our bodies, we need to constantly be working at it to keep it in tip-top shape.
This is a list of things that may seem harmless but can easily impact your score. Being mindful of what could hurt your credit score can help prevent you from being ‘blacklisted’.
Are you paying your debt consistently and without fail? If not, it is time to start doing so. Any amount is better than nothing. Your payment history shows how you’ve paid your debt over the length of your credit. It is evidence of repayment.
It may seem harmless but just one skipped payment or a default is enough to begin a cycle of increasing debt.
A history of late or unpaid debt does not reflect well and affects your credit score. Develop good money habits to ensure that you are making good financial choices.
As with most things in life, balance is key. Aim to acquire a balance between unsecured credit (credit cards or personal loans) and secured credit (car payments or a bond).
In doing so you will ensure a rather good looking credit record which will appeal to creditors and put you in good financial standing.
Focus on creating a credit history timeline you’d be proud to share on your social media feeds.
If you don’t have a credit account yet, get one. The point is not to spend frivolously but to start your credit history and create the timeline that, when managed well, will work in your favour.
Remember this, the longer your credit history, the higher your credit score will be.
Keep an eye on the information on your credit record. Make sure that it is accurate. Don’t be judged unfairly because of information that is incorrect and if you notice anything peculiar or unsavoury, report it immediately.
It is important to note that in addition to the credit you have successfully acquired, your credit report will also record the times you have applied for credit and not been successful.
Based on how often this has been, it could have a negative effect on your score. Think long and hard before applying at a different creditor after an initial failed attempt.
Make sure that you are giving all your debts equal attention. This includes credit accounts and also the essentials such as utilities, rent, phone or loans.
You may pay off some accounts faster than others, but don’t neglect or miss any payments as this will hurt your credit score and could get you ‘blacklisted’.
Hold onto that credit card even if the balance due is a big fat zero. When you cancel a credit card you do two things which can hurt your credit score – it reduces the credit amount available to you and will raise your credit utilisation ratio.
Your credit what? Your credit utilisation ratio is the portion of your available credit you use, expressed as a percentage.
NB: In addition to this, be aware that a high credit balance isn’t great either. Aim for a credit utilisation ratio around 30% of your available credit — the lower the better.
Sometimes your good credit record can lead friends or family members to ask you to co-sign their debt. If for any reason they fail to pay, you will be held liable and your financial reputation will be tarnished. Be careful before co-signing and consider the implications if things go wrong.
Knowledge is power. In this instance it can also mean access to funds when you need it the most. Know your status and where your strengths and weaknesses lie when it comes to your financial health.
Although this is a common misconception, the answer is: no, you are not blacklisted while under debt review. To protect over-indebted consumers from accruing additional debt while under debt review, their debt review status is indicated on their credit report. This informs creditors of their decision to focus on repaying what they owe before accessing more credit.
Once the process begins your Debt Counsellor will inform the National Credit Regulator’s Debt help system that you are on your way to a debt-free life. This restriction safeguards you from being issued with reckless credit.
Contrary to the misconception of being ‘blacklisted’, this is actually a positive thing.
Know your status by checking your credit report regularly. Educate yourself on what a good credit score is and what you need to do to attain it.
Your financial future is something you need to start thinking of in the present. Keeping an eye on the information that creditors are using to rate your financial health will help you make better financial decisions to ensure a robust and sustainable financial status.
Find out if you’re eligible to reduce your debt and protect your belongings.
Disclaimer: This website and any information herein is not intended to be, nor does it constitute, financial, tax, legal, investment, credit, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified professional directly.