Many South Africans considering debt review worry about how it will impact their credit score and ability to borrow in the future. Understanding the effects can help you make an informed decision and plan for financial recovery.
What Happens to Your Credit Score During Debt Review
When you enter debt review, your status is registered on your credit record with all major credit bureaus. This status shows that you are over-indebted and under legal protection to manage your repayments. While this may temporarily lower your credit score, it also signals to creditors that you are taking responsible steps to manage your debt.
It’s important to remember: being in debt review is not the same as defaulting on your loans. Your payments are reorganized to make them affordable, so as long as you adhere to your repayment plan, you are meeting your obligations.
How Debt Review Impacts Future Borrowing
While under debt review, it is generally very difficult to obtain new credit. Banks and other lenders will usually decline applications for personal loans, credit cards, or vehicle finance because the law restricts lending to consumers already under debt review.
However, this restriction is temporary. Once you complete your debt review and receive a clearance certificate from your debt counsellor, your record is updated to reflect that your debts were fully repaid under a structured plan. At this point, you can begin applying for credit again. Although your credit score may take time to rebuild, your disciplined repayment history during debt review can help demonstrate reliability to future lenders.
Tips for Maintaining Your Credit Health
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Make all payments on time – Your record during debt review is critical for future borrowing.
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Avoid new loans – Stick to your repayment plan without taking additional debt.
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Check your credit report regularly – Ensure your debt review status and subsequent clearance certificate are accurately recorded.
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Plan post-review finances – Create a budget and emergency fund to prevent falling back into over-indebtedness.
Final Thoughts
Debt review may temporarily affect your credit score and restrict new borrowing, but it is a powerful tool to regain control of your finances. By completing the process responsibly, you can repair your credit profile, learn better money management, and start building a stronger financial future.
