How to get a loan if you backlisted in South Africa?

10. Aug 2021
How to get a loan if you backlisted in South Africa?

In South Africa, banks and other financial service providers will not offer loans to blacklisted individuals. However,  many private lenders , offers many types of loans to blacklisted individuals.

Our daily lives are dependent on money. Today, cash is essential, and life becomes difficult without it. To live a typical modern-day, financial support is necessary. In South Africa, the average person's income may be insufficient to cover his household's expenses for the entire month. It isn't easy to save money and improve one's life in such a situation. This is where loans come into play in our lives.

Financial institutions and banks create and provide Cash Loans to individuals who require them. But Being blacklisted may prevent you from obtaining a loan to purchase a car or house. However, being blacklisted is not a crime. Many professionals have been on a credit blacklist at some point in their careers.

Types of Loans for blacklisted People in South Africa

PayDay loan

Private lenders offer microloans which are also known as Payday loans  to blacklisted individuals, on a short-term basis. This type of personal loan  is not secured, but it does  comes with exorbitant interest rates,  and  they  have to payed back  on your pay day.  Because of the cost of repaying the loan plus interest, it becomes quite difficult to borrow a significant amount.  These loans are often paid back automatically via a mandatory debit order that is  tied to your salary date.  

Secured loan

Individuals who are  blacklisted can readily obtain these type  loans. The lender uses an asset that they own as collateral or security to repay the loan. It is possible to get a loan against your car or other assets, such as a home.   If you do not pay the loan, you may lose your asset. 

What does it mean to be blacklisted?

It simply means that financial institutions consider you to be a risk and have placed you on their blacklist. It is critical to understand that the term "blacklisted" is a misnomer, as there is no such thing as a "blacklist" of individuals.

Individuals who faill  to consolidate and repay their debts are commonly referred to as "blacklisted."  

How to evaluate if you are on a  proverbial blacklist ?

In South Africa, everyone is entitled to a  free credit report , from any credit bureau operating in the country . This report is critical for you to understand what negative infomation there is on your profile.  On your credit report,  you should be keeping an eye out for "Defaults" and "Judgements". Being proverbially blacklisted, is generally associated with these two terms. 

What is a default?

A credit provider, such as a bank or retailer, can elect to list a consumer as defaulting on a credit commitment, if they have repeatedly not met the agreement terms. Typically defaults are listed for credit accounts overdue by 90 days.

What is a judgment?

A judgment is granted by the court when legal summons is issued and you fail to defend the summons or make payment of the amount claimed. A judgment remains on your credit record for 5 years or until it is paid in full or a rescission is granted by the courts.

Aside from your free report , certain firms will offer account status, credit score, and credit profile for a once-off or monthly fee, depending on how often you require these reports. If your credit rating is good, your credit score will generally fall is between 650 and 800, indicating how good your credit rating is. It is dependent on whether there is positive or negative information in your credit report. Your credit score reflects your overall financial behavior, both good and bad.


How can I get a loan if i am blacklisted or have a poor credit score ?

If you want to get a loan while being blacklisted, Check out these 11 tips for getting a loan in South Africa. 

There are few tips for improving your credit score:

1. Know your credit score

Avoiding reality is never a solution. Knowledge is power, but it will only get you began on the road to good credit. South Africans are allowed to have one free credit report per year under the National Credit Act. 

2. Pay your bills on time.

Your ability to make timely payments affects over a third of your credit score. So don't miss your payment or repayment dates. Your payment history affects your credit score.

3. Obtain some life stability

Avoid maxing your credit cards or paying overdraft fees. It may show low account balances, limit the amount of credit available for emergencies, and increase the interest paid over time.

4.  Avoid Court Show 

Receiving a court notice can be a risk for lenders because it can disrupt your eligibility and cause additional expenses. Avoid unnecessary court notice.

5. Don't over-borrow

Don't obtain any extras if your professional career is going well and confident in your future.

6. Being stable with the job.

Lenders notice unstable or irregular income, as well as frequent address changes. So try to stay at a job for a longer period and move less.

7. Low dues, high limits

Having high-limit credit cards with low monthly payments, or paying off most of your bills, will improve your credit score. Remember that banks view high-limit credit cards as a liability, even if you don't owe anything on them. When asking for loans, reduce your loan limitations.

8. Credit cards and overdrafts 

Close any unused credit cards or overdraft accounts. Closures are reported to credit bureaus, making you a less risky borrower in the future.

9. Don't ask for loans often.

Every loan application hurts your credit score. Your credit score may drop by 10% for each application.

10. Request your partner's credit

If you marry and wish to borrow money together, your partner's credit history may impact your application. So, before making major financial decisions, check their credit score.

11. Long credit history

You might be a great saver, but that doesn't mean you're good at managing debt to financial institutions. Consider a credit card with a low limit that you use infrequently and always pay off on time. Long credit history will significantly boost your credit score, making it easier to apply for a loan in South Africa.


Where can i apply for a loan if i am blacklisted ?

Fast Sell Classifieds have a number of private lenders who offer various loans types  based on your individual profile . CLICK HERE  to view all loan offerings on Fast Sell Classifieds.