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There are three key things you must do:
Paying your accounts on time is crucial
The single most important way of improving your credit record is to pay your accounts on time. This is because the most important information, other than negative listings, is the fact that you are (hopefully) now paying your accounts on time. Each month your payments get recorded in the Payment Profile section of your credit record and provided you have been paying your accounts on time for at least six months, or preferably a year, you stand a far better chance of being granted credit.
Paying unpaid accounts (but be careful when doing so)
If you have `forgotten` to pay some old accounts that are less than three years old you should pay them and have the accounts reflect as paid, unless they no longer appear on your credit record.
Stop a minute, don´t just pay.
Be careful, offering to settle an account is an admission of liability and it will result in your losing the legal defence of prescription - which provides that you do not have to pay an account which has remained unpaid for more than three years (unless legal action was taken or you admitted liability during that three year period). Admitting liability means you will have to pay all the collection, legal costs and interest as well, so it pays to be careful and not discard this defence when making payment. For more information on how to best settle an old account, contact us on info@cleardebt.co.za
It is also no use paying an old account in the naive hope that the negative listing will be automatically removed. Unfortunately the law does not force creditors to remove these negative listings once the account has been paid. It is important that you obtain written confirmation from the creditor, before you pay the account, that they will remove the Adverse Information and not simply amend it. If they will not remove it make sure they, at least, agree to amend the listing to reflect the account was paid.
Having court judgments removed is critical
Unlike an Adverse Information listing which can be removed or at least amended, a court judgment can only be removed before the 5 year data retention period (see below) if the court that actually granted the judgment orders that it be "rescinded". Judgments are very negative and should not be ignored, they are given a higher weighting than other negative listings because a magistrate or judge has held you liable. It is therefore really important to have any judgment rescinded as this will greatly improve your credit score. In rare cases you may still get credit despite a judgment reflecting on your credit record but you will be playing into the credit providers hands as they will feel justified in imposing a higher interest rate.
This is where a company, which specialises in rescinding judgments, such as ClearDebt, can be a huge help.
Why pay an attorney to get a judgment rescinded?
It is not a simple thing to have a judgment rescinded. It involves obtaining the original court papers, having the application typed up and correctly served, setting the application down for hearing, appearing in court and answering any objections, obtaining and processing the court order. That may not seem like much but the "devil is in the detail".
While many people think of themselves as lawyers they often find their inadequate knowledge of the law results in long delays, frustration and embarrassment. The famous American President Abraham Lincoln said "He who represents himself has a fool for a client." It makes sense to have an attorney assist you as rescinding a judgment requires a court application.
What does it cost to have a judgment removed?
But how expensive is it? Law firms usually charge by the hour but we charge a fixed amount, usually R1900 incl VAT, to have the judgment rescinded and removed. It really isn't a lot considering the amount of work involved. Given the far larger saving you will make by qualifying for a lower rate of interest, it makes sense to have a reliable lawyer, who specialises in this field, assist you.
Why use ClearDebt?
ClearDebt is ethical and
committed to helping people. We are passionate about
reducing the cost of credit and helping people become debt
free.
What else should you do before applying for credit
Aside from the three key issues explained above it is essential that you also take other action as part of your strategy to save on interest.
First, by law you are only entitled to the credit that you can afford. That means that should you have an existing credit facility that you do not use, such as an Edgars store card, this should be closed as the credit provider must take this facility into account when determining whether you can afford further credit. In other words, close those accounts you do not use.
Second, some types of credit such as credit cards or personal loans are revolving, in other words the account gets paid but quickly goes back into credit. In their nature these accounts reflect poorly on you as they imply that you are in regular need of credit. If possible, you should close these types of accounts.
Third, try to avoid debt spiral behaviour. In other words, do not borrow to pay your instalments on other credit facilities. Likewise, you should try to pay more than the minimum instalment amount on each credit facility as this indicates that you have disposable income. Lastly, avoid expensive debt, such as short term (30 day) loans.
Fourth, whenever you apply for credit an "enquiry" is added to your credit record. This is fine if it is done seldom, but if you make several enquiries for credit you will seem desperate and this will also reflect the possibility that you have already been declined credit. It is therefore best to rather clear your credit record of negative information and then apply to as many creditors as possible on the same day. That way they are unlikely to pick up the enquiries immediately as the enquiry data usually takes a couple of days to reflect on your credit record.
Fifth, if you apply for credit when you have "maxed out" all your credit facilities you will also run the risk of the application being declined or the interest rate being "loaded" (made higher), so ideally, try to apply for credit when you have paid down your existing credit facilities.
Sixth, the fewer different credit facilities you have the better. You do not need to consolidate all your credit but you should aim to reduce your "lines" of credit, as the fewer you have the better.
Seventh, if you are applying for credit with your spouse (or even someone else standing as surety/security), you should also ensure they have fixed their credit record and gone through all of the above tips and done their best to add to the good impression you are trying to create.
Those are the keys tips to ensuring you get credit and get it as cheaply as possible.
The information below is useful in understanding more about negative listings and how the listing process works, so please keep reading.
What Does It Mean to be "Blacklisted"
The term blacklisted is the colloquial term
used to describe people or companies who have a bad credit
profile, otherwise known as a credit record. While everyone
understands the term `blacklisted` there
is actually no `blacklist`.
Are you blacklisted?
It’s easy to find out. You need to get your credit record from at least two of the larger credit bureaus as they have different business subscribers and usually have different, but overlapping, credit data for every user of credit.
Where can I get my Credit Report?
At ClearDebt we draw a comprehensive report from different
Credit Bureaus. The cost of for this comprehensive Report
is a once of fee of R89.
Getting the full picture
To illustrate, you may find that an adverse listing such as a “Bad payer” default by e.g. Appliance City only appears on your Experian credit record and a magistrate’s court judgement by e.g. Standard Bank only appears on your TransUnion credit record. So, to be on the safe side, get your comprehensive credit report from ClearDebt
What´s the issue?
Being blacklisted is horrible. It is extremely difficult to get any kind of finance if you have a poor credit record. Even when you get finance the rate of interest charged is usually far higher than it would otherwise be. Basically your financial reputation is negatively affected by any adverse listings and unless they are removed you are treated like a financial leper.
Types of negative listings
The type of listings on your credit record is broken down into four major categories: Payment Profile; Adverse Information (previously called Defaults); Judgments; and Notices. These listings are also generally known as negative or adverse listings and, depending on the type of listing, you will either not qualify for credit at all (where for example you have a Notice on your credit record) or have to pay much more (by way of interest, an upfront deposit, increased security or loaded settlement terms). So, it is best to try to have as many of these adverse listings removed as possible.
So how bad is each listing type?
The worst listings are without doubt Notices. If you have been placed under administration or been sequestrated you will not get credit, full stop. You can apply to court to have the situation corrected. Unless any Notice is removed you cannot get credit because the credit provider is acting illegally in lending you money.
Judgments are the next most serious type of listing. They are highly likely to stop you getting credit. In rare cases you may still get credit despite having had a judgment granted against you. You will just pay far more for it. Much depends on the amount of the judgment, how long ago judgment was granted, what other listings you have and whether your payments over the last two years have been on time or were frequently missed or delayed. Fortunately getting a judgment removed is relatively easy - you still need to go to court but the process is less complicated.
Adverse Information can stop you getting credit but in most cases it will impact the cost of credit more than your ability to get credit. Again, much depends on whether it was a recent listing and whether the account remains unpaid. Generally this type of listing can be removed on instruction by the creditor (but often the creditor will refuse to do so unless they receive a detailed motivation). At the very least it is important to have the listing amended to reflect that the account was paid.
Payment Profile information changes monthly as the payments made or alternatively missed during that month gets noted on your credit record. The most recent data gets added while the oldest data gets deleted. It is far less serious than the other types of listing but like the other types of listing, if you have a very poor payment profile during the last six to twelve months you will either not get credit or find the cost of credit far higher.
Data Retention Periods
What most consumers and/or debtors are unaware of is that all types of credit data are subject to strict maximum data retention periods. These data retention periods are as follows:
Notice of Sequestration - 10 years
Notice of Rehabilitation - 5 years
Notice of Debt Counselling (after termination of Debt Counselling) - removed immediately
Notice of Administration (after lapsing or rescission) - removed immediately
Notice of Administration (if current, i.e. not lapsed or rescinded) - 10 years
Civil court judgments (High Court or Magistrates Court) - 5 years
Adverse Information - 1 or 2 years (depending on type)
Enquiries by Credit Providers or Subscribers - 2 years
Removing negative listings before the data retention period expires
Yes, these listings stay on for what seems an eternity and sometimes it is impossible to wait for these listings to fall off. It is possible to have most of these listings removed before the data retention period expires.
For starters, court judgments can be rescinded by the court that granted the judgment. Once rescinded, the credit bureaus must remove the judgment listing; this is because the court has made the judgment void.
Adverse Information can also be removed on instruction by the creditor. While members of the Credit Providers Association will only remove the adverse information in limited circumstances, most other creditors will do so following payment of the account.
Administration and Sequestration notices can also be removed following application to court.
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