Before creditors or debt collectors can blacklist you at a credit bureau, there are certain steps they must follow, as stipulated in the National Credit Act (NCA).
The NCA requires that your creditor – the company to which you owe money – or the debt collector responsible for collecting the money inform you in writing of their intention to negatively list you at a credit bureau. They are required to give you 20 working days to respond before submitting your name to the bureau for listing.
A consumer who recently found she was negatively listed at a credit bureau had her profile cleared after an investigation by the office of the credit ombud revealed that the creditor and the debt collector had failed to follow the proper process.
Mrs Smith (not her real name) moved her children from a private school to a public school because the family was experiencing financial difficulties. Although she confirmed with the school telephonically that her accounts were up to date, she later received a letter from the school informing her that there was more than R4 000 outstanding in fees.
“The letter did not mention [the school’s] intention to negatively list the alleged default at the bureau, nor that the account would be handed over to a debt collector, who would list the information at the credit bureau,” Manie van Schalkwyk, the credit ombud, explains. “Mrs Smith was handed over to a debt collector without her knowledge, after she had settled her account,” he says.
The debt collector then listed her at the credit bureau as defaulting on her credit profile because she had failed to pay a penalty fee.
Mrs Smith’s employment was jeopardised and she lodged a complaint, since she had not been notified about any of the charges, including the penalty fee, and neither was she informed at any stage of the school or the debt collector’s intention to list her at the credit bureau.
“We contacted the credit bureau to find out if the correct procedure was followed before the consumer was listed, and neither the school nor the debt collector had complied with the requirements in the NCA,” Van Schalkwyk says.
As a result, the credit bureau concerned was ordered to remove the listing from Mrs Smith’s profile.
Van Schalkwyk says that having a default listing against your name, even for a small amount, can cause you not only financial and emotional distress but prejudice your chances of getting a job or accessing further credit.
Under the NCA, you have the right to access and challenge information held by a credit bureau and are entitled to get this information free of charge once a year. If you request the information more than once a year you have to pay a small fee, which is also regulated by the Act.
“Consumers are entitled to challenge and request proof of the accuracy of information held by a credit bureau and [ascertain] that the correct procedure was followed prior to any listing,” Van Schalkwyk adds.
“Should a credit bureau fail to provide the consumer with proof of the accuracy of the information or that the stipulated procedure was followed, it is compelled to remove the disputed information from its records.”