Does Debt Review Hurt Your Credit Score?

Dealing with debt is daunting! But debt review offers an affordable way to get out of debt, once and for all, while providing immediate financial relief.

It’s a common concern among many South Africans that going under debt review could potentially negatively affect their credit score. Don’t let this deter you from reaching out to a registered debt counsellor.

To make informed decisions about your financial health, it is important to understand what happens to your credit report when you go under debt review.

How does Debt Review Impact Your Credit Score? 

Upon entering the debt review process, your credit report will indicate that you are under debt review. This is not an indicator of financial irresponsibility but rather a step to prevent accruing further debt, which could worsen your financial situation. The restriction from acquiring additional credit during debt review is a safeguard for your credit score, preventing the possibility of worsening your financial health by accumulating unmanageable debts.

Safeguarding Your Credit Score 

Incurring new debt when under debt review is illegal. When under the process, your credit report is flagged until you’ve received your clearance certificate. This serves as a protective barrier for your credit score. It shields your score from potential long term harm that could arise from taking new loans you cannot afford. When already over-indebted and struggling with repayments, taking on new debt can significantly harm your credit score.

Debt Free with a Clearance Certificate 

Achieving full payment of your debts earns you a clearance certificate, signifying your debt-free status. At this point the flag will be removed from your credit report. This certificate means you are now debt free (excluding your home loan if payments are up to date). You will be able to apply again for credit freely.

Keeping to your repayment plan during debt review demonstrates effective financial management skills, which positively reflects on your credit score and contributes to its improvement over time.

Restoring Creditworthiness 

Post-debt review, not only are you likely to be debt-free or significantly less indebted, but you also stand a chance to enhance your credit score. With the removal of the debt review marker, your prior financial struggles cease to negatively impact your credit score.

Opting for Debt Review through Debt Rescue means navigating this journey with support. Our expert team, boasting over 16 years of experience, simplifies this process for you, ensuring you’re informed about the impact of each step on your credit score and overall financial wellness.

Embark on your path to financial freedom and credit restoration. Visit our website for additional information and to receive your Free Assessment Today.