If you’ve been blacklisted, you may struggle to rent a house or enrol your children in school. Here’s how to overcome some of the challenges you might face.
If you have been blacklisted, you will be aware that it is now close to impossible for you to obtain credit from most high-end financial institutions, but what you might not know is that there are a number of other areas in which things might now prove difficult for you.
Many organisations run credit checks for various reasons, and when they do, your credit record will reflect your poor payment history. You should be aware that no organisation may run a credit check without your permission, so you will always know if this is going to take place.
If you have been blacklisted, it helps to be aware of where you might encounter problems, and to know how you can work around them. We spoke to Damon Sivitilli, the head of marketing at DebtBusters , to find out how a blacklisting will impact on your life.
Although we use the term “blacklisting”, in reality there is no such thing as a black list of bad debtors with your name on it. Instead, there are various credit bureaus where credit providers or businesses make notations about your good and bad payment behaviour.
The three main types of notation are:
- arrears, when you are late with a payment
- default, when your payment is overdue for an extended period of time (usually more than six months)
- a judgement, when action has been taken against you in the High Court.
The frequency and number of these listings have different weightings in financial institutions’ credit scoring processes – but as soon as you have a default or judgement, most major financial institutions will no longer grant you credit.
You may also encounter problems in the following areas:
Most estate agents will run a credit check against your name when you are applying to rent a home. If you have been blacklisted, their internal processes will probably prevent them from letting to you. However, if you find a sympathetic agent or landlord and can show that the blacklisting took place a while ago, or that your circumstances have changed, you might be able to come to an arrangement. If this doesn’t work out, you will probably have to do a private rental found through the classifieds or by word of mouth through friends.
If your circumstances have improved, you may be able to negotiate
Most schools’ number-one concern is whether parents will pay their fees, so many of them will request permission to run a credit check. When a sought-after school sees a poor payment history on a credit report, they will be less likely to grant you a place. Again, if your circumstances have improved and you are able to meet your financial obligations, you may be able to negotiate . If you are applying with paperwork and no face-to-face contact, and have signed permission for a credit check, you may want to include a letter explaining the background and your current circumstances.
When you sign a contract with a cell phone provider or an insurance provider, they might ask to run a credit check so that they can discover whether you have a history of non-payment of accounts.
Obviously, when it comes to cell phones, you can purchase a pay-as-you-go SIM card without really being inconvenienced in any way. In terms of insurers, you might have to shop around until you find someone willing to enter into a contract with you.
Banks and other financial institutions subject their potential employees to a higher level of scrutiny than other organisations. They need to know that employees are honest and reliable and unfortunately, a poor credit record can indicate a lack of trustworthiness.
If you have a current judgement on your credit record, it would be a good idea to keep the job you have, or to look for work outside of the financial services sector.
While there is almost no chance that the leading banks will grant you credit, if for some reason you need to borrow money and are able to pay it back, smaller lenders might still be willing to grant you a loan – probably at a high interest rate. Going into more debt is inadvisable, as it will slow your financial recovery and impede your ability to pay back the money you owe.
Any existing lines of credit you may have will not be closed, so if you have a credit card or a retail account that you have managed to keep paying back, you can dip into those in an emergency.
While there are ways to work around the challenges you will face if you are blacklisted, the best way to overcome them is to repair your credit record. The only way to do this is to pay back the money that you owe, so if your financial situation has improved, do what you can to get rid of any outstanding amounts as quickly as possible. Good luck in returning to financial health.