Do you have trouble paying the monthly payments on even the most basic of your bills? Have you fallen into a deep hole of credit debt that you’re having difficulty climbing out of? This can be a very difficult situation for you to deal with, so it’s important to handle it properly to make sure you stay on solid ground with your finances. If your credit has already fallen into a downward spiral, then you may be labeled with the term ‘blacklisted.’ This will definitely make it more difficult to fix your finances, so let’s take a look at what blacklisted is, and why as a blacklisted person you’re no longer allowed to take on personal loans.
The term blacklisting is used mainly in the credit industry by banks or retail establishments who wish to report a person who is not paying their debts as they should be. Don’t confuse this with someone who misses a payment or two – this is not cause for blacklisting. This term is reserved for those who refuse or cannot pay their bills on a regular basis. You may not even be aware that you have been blacklisted until you go to open up a line of credit and a credit check is run in your name.
Why is this blacklisting done? This term is applied to you and your finances to serve as a kind of warning, so that in the future when you plan on opening lines of credit, that there will be a warning attached that can deter or inform the lending companies of your financial misconduct. What does the blacklist actually tell these credit companies? It’s essentially a file of your information, including any prevalent personal details, any employment details, as well as the credit behaviors that led you up to this point.
Before the recent changes in the rules that dictate the credit market and the rules for loans being given out, there were personal loans that were easily attainable without a credit check, which would leave out this blacklisted label. This gave blacklisted people a line of credit, and this was something that was being abused and causing turmoil between the lender’s and the borrowers. The personal loans or payday loans were being given out freely, but to high risk people who couldn’t afford to pay this money back. This resulted in companies losing out on big money due to these faulty investments. Along with this, the borrower taking out the loan was often saddled with high interests rates or the requirement of collateral. Both of these things were detrimental to South African citizens and the credit market, thus it had to be stopped.
If you have a bad credit score, then it's highly unlikely that you will get a loan. Get your credit score first and see where you can improve.
Now that credit checks are required for all personal loans, banks and borrowers are being forced to follow systematic and fair changes that benefit both sides. You no longer have to take out an incredulously expensive loan, nor do they have to lose out in bad investments that will end up hurting the company and the credit market as a whole.