Is Debt Review bad for your Credit Record in the long run?

Is debt review bad for your credit record?

Is Debt Review bad for your Credit Record in the long run?

Debt review is a popular debt rehabilitation option that is available to South African consumers who are seeking financial stability. While overcoming debt can seem almost impossible, debt review is the first step to managing monthly payments, thanks to the advantage of a new debt repayment plan that is more suited to your current monthly budget, income and financial responsibilities.

Even though debt review has proven to be an effective approach for many individuals, it is important to understand the possible implications of debt review on your credit record, as well as its impact on your credit record. Our Credit Rehab team of experts offer a comprehensive and effectual debt review service to South African consumers, aligned with your needs and affordability. Following the success of your debt review, you as the consumer will be issued with a Debt Clearance Certificate stating that you have paid off all outstanding debts, as outlined in the repayment plan set up by our Credit Rehab financial team.

After successfully undergoing debt review with Credit Rehab, our dedicated team will correspond with your various creditors to indicate that you have completed debt review successfully, and all red flags relating to debt review will be removed from your name, however your payment history will still reflect on your profile for up to 2 years. Debt review could also negatively affect your credit score, due to the lowered monthly payment amounts that formed part of your repayment plan. Your credit score can be improved over time, as you better manage your financial obligations and any credit related repayments going forward.

Once all your debts have been settled and you are no longer undergoing debt review, your status will be changed with the National Credit Regulator (NCR), to “No longer under debt review” and you can begin to improve your credit score and credit profile, as well as apply for new credit (although this needs to be done with caution, to avoid the same debt issues and payment habits from resurfacing). Our team of professionals will advise you on the best way forward if you find that you are still experiencing issues with your credit record long after you have completed debt review, as certain exceptions may occur that require legal assistance to clear your name.

Our Credit Rehab financial experts often recommended that, straight after completing debt review, you avoid new credit and focus instead on managing your budget and finances. In time, it is very possible to enjoy a clear credit score and, if your finances allow, apply for housing or vehicle financing.

Even though it might be difficult to attain new credit for the first while after debt review, your credit score will slowly start to improve as you maintain good credit behaviour. Some creditor providers will be more reluctant to approve your loan or credit application than others for the first two years after your debt review, as they use your credit history for reference. As you continue to make good financial decisions and pay back new bills on time and without issue, your credit score will improve.

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