Debt

Here Are The Reasons You May Be Blacklisted

Blacklisted_Debt

How do you know if you have been blacklisted? You try to take out new loans from multiple credit providers and your applications keep getting denied. All of a sudden you feel stuck and don’t know where to turn. If you are feeling like this, you are not alone. Many South Africans reach this point after using debt for a long time.

How Do Banks Choose Who They Will And Will Not Lend To?

Every credit provider has different lending criteria. These are usually based on a consumers risk profile. Certain credit providers have a larger risk appetite and lend to a larger range of consumers.

When you become too risky, credit providers will stop lending you money. This isn’t to say that they will never lend you money again, but rather at that point in time you are considered too risky.

A quick check to gauge your risk is to check your credit score at the bureaus. The credit bureaus each have their own risk score, usually indicating whether your score is “good or bad” or more accurately “low or high risk”.  The credit providers have a similar risk scoring system which determines whether they will lend to you or not.

Why Am I Being Denied Access To New Loans?

Here’s a list of potential reasons why you are being denied a loan. Most of the time it has to do with your credit behaviour, which affect your credit profile.

  • Accounts in arrears – missed or short-paid certain debts
  • Defaults / Adverse information on your credit report – credit provider has initiated legal action or debt collections due to missed payment
  • One or more debt related judgments on your name – credit provider has obtained a court order to collect money on an overdue account
  • High debt-utilization – current balances on loans are close to the opening balances
  • Lots of new debt – many new loans taking out recently

How Can I Fix My Blacklist Situation?

In order to improve your credit report you will need to clean up the negative information that appears on it. The first thing that needs to be done is to catch up on all missed payments and arrears. Secondly, all defaults and judgments will need to be settled and subsequently removed from your credit report.

Once all the negative information has been wiped out you will need to make full, continuous payment for a period of 3-6 months to start really improving your credit score and standing.

If you are unable to catch up on payments and find yourself falling behind more each month you need to speak to a debt counsellor. A debt counsellor will negotiate with your credit providers to reduce monthly repayments and interest rates. The debt counselling process helps thousands of consumers to take control of their debts each and every month.

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