After a draining job hunt, you finally find the perfect fit at your dream company – hell, you even had the boss in stitches during your interview.
So when you receive the call you’ve been waiting for, your chin hits the floor when they tell you you’ve been “blacklisted” and your application has been rejected.
Understanding the ins-and-outs of being blacklisted can be complicated. To help you come to grips with it all, Shavani Naidoo, marketing manager at TransUnion, joined us for a Q&A.
Shavani, who’s currently doing her MBA through Henley Business School, has been working at TransUnion for two years – one of the four main consumer credit reporting agencies in South Africa.
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Shavani, where did the term “blacklisting” originate from?
It’s an historical reference which stems from some time back. The term refers to when credit bureau/s only held negative credit information on credit active consumers. Thus, if your name appeared at a credit bureau, you were considered to have been “blacklisted”.
Fortunately, with time this practice changed for the better, where credit bureau/s now list both positive and negative credit information pertaining to consumers based on the terms agreed to in the specific credit agreement.
This gives credit providers a more holistic view of a consumer’s credit status and behaviours. Credit bureaus therefore do not keep a “blacklist” as such. Instead they provide a reporting service to credit providers for the purposes of helping them assess a consumer from a credit perspective.
It is important to note that credit bureau/s play no part in making the credit-lending decisions. At the end of the day it is the credit provider that makes the decision to accept or decline a credit application.
What does so-called “blacklisting” then actually refer to?
The term blacklisting is also a bit of a misnomer as it can be interpreted in many ways by different organisations and people. Generally, the term is attached to negative information contained in a consumer’s credit report. These types of listings can include:
- Overdue account – this is an account which has not been paid on time according to the credit agreement. They are usually overdue by 30 days or more.
- Default – a credit provider can list a consumer as defaulting on a credit commitment if they have not met the agreement terms – usually when they are overdue by 90 days or more.
- Judgments – a credit provider can take further steps on an overdue credit account by applying for a court judgment against a defaulting consumer.
- Notices – in addition, a credit provider may take legal action in the form of a notice, which can include an administration order against a defaulting consumer.
What steps should someone or a company take if they want to blacklist someone?
As previously stated, blacklisting is a misnomer and an organisation or consumer cannot be “blacklisted” as such.
In the case of applying a negative listing against a consumer or organisation, this process is more complex and strictly regulated by the National Credit Regulator under the National Credit Act.
Only registered credit providers, the courts, and utility providers can make a negative listing against a consumer. But they cannot do this in isolation and are also required to list all applicable credit data, both positive and negative, that they may have for the consumer.
This credit data submission process is governed by the South African Credit & Risk Reporting Association and the Consumer Bureau Association.
If you find that you have been unfairly received a negative listing, what can you do about it?
If the consumer has not already done so, they should contact a credit bureau, such as TransUnion, to get a copy of their credit report. By law, every credit active consumer is entitled to one free credit report every 12 months from the credit bureaus.
Consumers may contact TransUnion on 0861 482 482 or at www.transunion.co.za in order to obtain their free credit report as well as log a dispute.
If the credit report reflects a negative listing, which in the consumer’s view is inaccurate, the consumer can log a dispute with any of the active credit bureaus in South Africa.
The bureau will ask them to submit the relevant documentation supporting the claim. This dispute is then logged for verification with the organisation who made the negative listing. This process is legislated and takes 20 working days.
Consumers are cautioned not to take chances with this process, as in the case where the dispute is found to be invalid, this is recorded on their credit report for a period of 12 months.
If you find you have fairly received a negative listing, how can you improve the situation?
The type of negative listing will determine the correct course of action. Defaults and judgments, if paid up, can be removed with the help of a credit bureau like TransUnion. Once paid-up, these may be automatically removed.
However, if a consumer wishes to expedite this process they can log a dispute with the credit bureau. They will need to submit the relevant documentation including the paid-up letter, from the organisation that listed them originally. Again, this process can take up to 20 working days.
A notice, will however require the submission of a rescission court order, in order for the credit bureaus to remove the record. Overdue accounts cannot be removed and will remain on a consumer’s credit report for 24 months. A default will remain on a consumer’s record for 1 year.
Paid-up defaults are removed once confirmation of paid up status is received from the credit/service provider, while judgements remain for a 5-year period, or until it is paid in full. Notices include administration orders, provisional sequestration, sequestrations and rehabilitation orders.
- Administration orders remain on your credit report for 5 years;
- Rehabilitation orders remain for 5 years; and
- Sequestration orders remain for 5 years, if no rehabilitation order is granted.
If the negative listing can’t be removed, what should you do?
You can focus on improving other areas of your credit report to try and offset the impact of the negative listings. Broadly speaking, there are 4 things a consumer should focus on:
- Pay your accounts in full and on time in accordance with the credit agreement. This is usually monthly, and credit providers view a long history of up-to-date credit accounts positively.
- Keep the utilisation of available credit low, especially for unsecured credit accounts. In general, maintaining balances at around 35% of available credit is considered prudent.
- Try to show a good mix of secured and unsecured credit accounts. A variation of credit types shows credit providers the consumer is able to manage different types of credit commitments.
- Lastly, don’t shop around for more credit at the same time, too many applications in a short space of time signal to credit providers that the consumer’s financial status has changed recently, and is a leading indicator of financial distress.
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