A Guide To Cell Phone Contracts and Blacklisting or Low Credit Score-Cards
Phonefinder is all about cell phones. Be it cell phone contracts, cell phone repairs, news, reviews or accessories. We are particularly proud of our comprehensive cell phone contract comparison. You see there are up to 5000 unique deals on offer from all the Networks in South Africa (Vodacom, MTN, Cell C and Telkom).
However applying for a cell phone contract is not as straight forward as it used to be.
You may have been one of the 80% of all South Africans to have been declined a cell phone contract this year. You may even be wondering why: you pay your bills, you have a job. It seems unfair (it certainly is frustrating) that you were declined a contract.
Why then were you declined a cell phone contract?
Well there are many reasons why you may have been rejected, but they all sum up into a "Blacklisted” status. The fact is that a cell phone contract is bundled up into subscription for the Network’s services and a loan which pays off the actual handset. If you have a bad credit history you cannot apply for a loan. It’s as simple and as unfair as that.
While there is nothing we can do to improve your chances of getting that cell phone contract you found on Phonefinder we have at the very least put together the information below to help you understand what is actually going on when you apply for a cell phone contract, why you might be declined one and most importantly what you can do if you are declined a cell phone contract.
I have a low ITC score but I am not blacklisted
For most cell phone network service providers, a low score card is just as bad as being blacklisted. They simply don’t want the risk, and that is understandable. The problem is that you are an individual and not a number – so it won’t seem fair to you especially if you have a good job and were unfairly added to the credit bureaus as a bad debtor.
MTN, Cell C, Vodacom and Telkom have each put together their own credit score-cards which need to be passed before being approved for a cell phone contract. The score cards are closely guarded secrets, however what is not a secret is that it is increasingly difficult to pass on these score cards.
Luckily for you, there are service providers who are willing to take the risk. These service providers operate on a lower ITC risk score card and therefore your chances of being granted a cell phone contract by them are higher.
What does it mean to be "blacklisted”?
The truth is that there is no such thing as being "blacklisted”. Being blacklisted simply refers to the fact that you have a negative rating on your credit report. Being blacklisted is an informal term which encompasses the reasons why you may be refused credit.
What information is used to form a blacklist judgement?
Payment defaults, judgments, sequestrations or an administration order.
What can be done to prevent a bad credit record?
Simply ensure that you pay your bills in full and on time.
Becoming blacklisted: how it works
A) Trans Union ITC and Experion (the two main credit bureaus).
B) Companies that extend credit (retail store, cell phone Network or bank)
C) Members that subscribe to the bureaus.
If you do not pay your accounts to (C) then your information will be sent to the bureaus (A) for all other credit extenders (B) to make use of.
How long will my credit records be tainted?
Bad debt, judgments or any other blacklisted information will stay on your credit record for 5 years regardless of you subsequently paying the bill.
Can I Clear My Name?
Yes, however it is a rather meticulous procedure and requires a lawyer and the debt in question to have been paid.
An attorney would (in a nutshell) bring forward all of your paperwork to the appropriate magistrate, who upon seeing all evidence of you paying your debts will grant you a clean bill. At this point all the credit bureaus will have to amend their records and ensure that there is no trace of the blacklisting.
Amendment: Since 13 March 2015 when the National Credit Amendment Act came into effect, the retention periods have changed to the effect that blacklisted status last for only one year for adverse listings (still five for judgments) and blacklisted individuals are removed by the bureau without the intervention of a lawyer or court once the debtor settles the debt.
There is no shame in being blacklisted
Being blacklisted simply means that you owe someone money, and it can be as little as R500 (the minimum amount owed to a creditor before you can be blacklisted). That means that you could have even been unfortunate to have not received an invoice in the post and gotten blacklisted as a result.
Check your credit status for free
To speed up your cell phone contract approval why not first know your credit status? Credit bureaus are obliged by law to give you a free copy of your credit report. So do yourself a favour and go check your score.
Some handy legal terms
The below list of legal terms are in order of severity. We hope they help you make more sense of your credit score.
Delinquent Classification: This is simply a slow paying classification. It means that you pay your creditors, however not in agreed upon times.
Default: This happens when you fail to make your payments in terms of your credit agreements.
Judgement: This is the legal process which will conclude with a judgement. A judgement will start with a summons which will give you a date for when you must appear in court. The credit bureaus will not remove a judgment unless it has been cleared through the legal proceedings.
Administration order: You can apply for an administration order only if your debts do not amount to over R50,000.00 This will then let you pay an administrator monthly installments until all your debt is paid off.
Sequestration: This is when you are declared bankrupt. A sequestration must be granted by the High Court. Once declared bankrupt your creditors are unable to take further action, however you will not be allowed to apply for credit for up to ten years.