What Does it Mean To Be Blacklisted in South Africa?

Blacklisting in the context of loan or credit application in South Africa refers to being penalized for non-payment of outstanding debt.

The term is no longer in use in the country, with its removal from the National Credit Regulator’s vocabulary back in 2011. Nonetheless, it is often thrown around even today as a ‘scare tactic’.

“Blacklisting was, in essence, an informal term used to indicate negative information on someone’s credit report. It was widely used during a time when only negative data would be collected by
bureaus,” Charlie Bailey, General Manager at credit report group ClearScore SA said.

“But the term is now obsolete. For several years, positive data has also been recorded in credit reports. This means there’s a greater number of elements included on your credit report to help lenders decide your creditworthiness.”

Nowadays your credit score is calculated on a scale of 0-999. The lower your score, the higher the chances that your application of credit will be turned down. You can read our article on how exactly your credit score is calculated and how to improve it.

So, while in the old times being ‘blacklisted’ by a credit bureau would essentially rule you out from qualifying for any credit, nowadays a lot of other factors go into the decision.

Default or delay on one loan or credit facility will certainly impact your credit score negatively, but because of the credit score system, it will not be a knock-out punch. If blacklisting still existed, you would not access any credit.

Read: Refinancing Your Home in South Africa

Factors that affect your credit score negatively

Arrears: This is when you are late on your payments, usually from a few days to just a few months.

Defaulting: This is when your payments and penalties are long overdue, often for periods exceeding 6 months. The assumption is that you have no intention to pay up.

Inconsistent installments: The more inconsistent your repayments are, the lower your credit score gets.

Sequestration: This is a court order declaring you bankrupt. Typically, credit bureaus will hold onto this data for 10 years.

You can ensure that you remain on the right side by negotiating with creditors to reduce monthly repayments, negotiating affordable settlements for outstanding debts, and ensuring you are well informed of the timelines, particularly the debt expiration date.

Can I be blacklisted in South Africa?

To wrap up, the term blacklisting is obsolete in South Africa. However, the reasons people used to get ‘blacklisted’ for in the old times still exist and the repercussions are still there.

That means that while the term is no longer used, you can still fail to qualify for credit.

The circumstance that have changed is the process of ‘blacklisting’. Before 2011, credit bureaus would only collect your negative information regarding loan repayment. That meant that a single defaulted loan would disqualify you. Today, your score is calculated by collecting all information about your loan repayment habits, good and bad.

So, for you to get ‘blacklisted’ today, your negatives would need to outweigh your positives. If you have a low enough credit score, no lender will be willing to touch you, and it will sure feel like you have been blacklisted.

Read: How to Check Your Credit Score in South Africa