Listed, can I buy a house?

A Fin24 user who is listed would like to buy a house. She writes: 

I would like to purchase a property, however I am listed.

Is there any possibility of this happening?

Gustav Zwiegelaar, regional manager at SA Home Loans in the Western Cape, advises:

There are no hard and fast rules to indicate at which stage credit to a consumer will be refused but, in general terms, credit providers will not want to engage with a consumer once the payment profile on their credit report reflects that accounts are not well maintained with regular monthly payments.

This is compounded by default data listings and a judgment is generally regarded as an absolute exclusion to qualify for a loan.

Responsible credit behaviour is a necessity when one plans on obtaining credit finance of any kind in future. Knowing and understanding the exact details of your credit status will empower you to take appropriate action to ensure that you qualify for a loan in future.

I suggest that the reader obtain a credit report and approach someone who will be able to accurately interpret the information and provide guidance.

Consumers are entitled to a free copy of their credit reports in their month of birth.

What consumers should know about credit reports and consumer conduct:

A credit report contains general personal information, such as ID number, address and contact details, marital status, employer details and so on, which is handy to have from an assessment point of view. The important information is the following:

This is a summary of the monthly credit commitments for a consumer. It lists all the accounts payable, giving the monthly instalment due, the opening balance and the current balance. For each account there is also a 24 month history of payment, which reflects accurately whether any accounts had not been paid on time for any given month during the 24 months mentioned. Typically consumers have credit cards, clothing accounts, store accounts, motor vehicle payments, insurance contracts, telephone bills and home loans, all of which are listed with detailed account payment behaviour reflected. 

Failing to make payment for any such account is indicated by a digit which reflects the amount of months such an account is in arrears by. This is usually the best indicator of how future accounts will be handled. An account that remains unpaid for a period of nine months may thus be reflected as 0I1I2I3I4I5I6I7I8I9I. An account which was unpaid for a couple of months and then brought up to date may look like this over a six month period: 0I1I2I1I0I0I. 

Default data:

This is a summary of any accounts that had remained unpaid for an amount of time that had been sufficiently long for a credit provider to take action. A credit provider will list the client as a “defaulter”. This is viewed more seriously than a skipped account payment and indicates that the credit provider had tried to collect payment but payment was not made and usually leads to legal action being taken. The payment profile may look like this: 0I1I2I3I4I5I6I7I8I9ILI-I-I-, the “L” indicating that it was handed over for legal action to be taken.

Once a consumer had been listed as a defaulter a credit provider can hand the matter over to a legal expert to litigate for payment of the account. The litigator will seek payment via a legal process and, should payment not be forthcoming escalate the matter to court.

This indicates that an unpaid credit account had been through the legal process and presented to a court where judgement was handed down against the consumer for non payment of an account.  This is also commonly referred to as “blacklisting”.

At this point the account remains payable, but not only this; once settled the judgement remains in effect and can only be removed through the judicial process in a court of law and usually with the consent of the credit provider.

This indicates which institutions had made enquiries on a specific consumer and when. Usually consumers with a poor credit history have more enquiries made as they often shop around for credit. A combination of poor credit behaviour and a high number of enquiries can be a “red flag” to a potential credit provider, especially if the enquiries are made by providers of short term credit and personal loans. On the other hand, when consumers purchase homes or vehicles it is not uncommon to see numerous enquiries from different institutions as consumers shop around for the best credit deal.

*For more property news visit Property24, SA's leading property portal offering houses for sale, and property to rent.

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