How Does Debt Review Affect My Credit Record?
Short answer: When you go under debt review, a note (often called a flag) is added to your credit record. This shows lenders that you're under debt review, so you can't take out new credit until you finish. Your payment history keeps being recorded. Once you've paid off your debts and get a clearance certificate, the flag is removed.
What is the debt review flag?
When you apply for debt review, your debt counsellor must tell the credit bureaus. The bureaus then add a note to your credit record. People call this the debt review flag.
The flag tells any lender who checks your record that you are under debt review. Its main purpose is to protect you. It stops you from taking on new debt while you are paying off the debt you already have.
Is debt review the same as being blacklisted?
No. In South Africa there is no single "blacklist". The word is often used to describe a credit record with bad marks, such as missed payments, defaults or court judgments.
The debt review flag is different. It doesn't mean you refused to pay. It shows that you are dealing with your debt through a legal process. In fact, many people go under debt review before they collect a lot of missed payments and judgments.
That said, while the flag is on your record, lenders won't give you new credit. So in practical terms, you will be shut out of credit for a while.
Can I get credit while under debt review?
No. While you are under debt review you can't take out:
- New loans or credit cards
- New store accounts
- Vehicle finance or a new home loan
- Cellphone contracts, which count as credit
Your existing credit cards and store accounts are usually closed or suspended so that the debt can't grow.
Many people find this a relief. It breaks the cycle of borrowing to pay off old debt, and it gives you time to rebuild.
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Does my payment history still count?
Yes. Your creditors keep reporting to the credit bureaus while you're under debt review. Every month you make your debt review payment on time, it adds to a record of steady payments.
This matters. When the flag is removed later, lenders will look at how you handled your debt. A record of regular payments under debt review can work in your favour.
If you miss debt review payments, though, that will show up too. It can also put your plan and your legal protection at risk.
When is the debt review flag removed?
The flag is removed when you finish debt review. Here is how it works:
- You pay off all the debts in your plan. A home loan is the exception and can keep running as normal.
- Your debt counsellor issues a clearance certificate.
- The certificate is sent to the credit bureaus and the National Credit Regulator.
- The credit bureaus remove the debt review flag from your record.
Some people want to leave debt review early just to get the flag removed. Leaving is not simple once a court order is in place, so speak to your debt counsellor about the rules before you decide.
How do I rebuild my credit after debt review?
Once you have your clearance certificate, you can start building a healthy credit record again:
- Get a free copy of your credit report and check that the flag has been removed. You are entitled to one free report from each credit bureau every year.
- Start small. A small store account or a basic credit card, paid in full each month, can show lenders you handle credit well.
- Keep a budget and build an emergency fund so you don't need to borrow when something goes wrong.
- Be patient. A good credit record is built over time.
Key takeaways
- Debt review adds a flag to your credit record while you are under the process.
- The flag is not the same as a judgment or a default listing, but it blocks new credit.
- Your on-time debt review payments still count towards your payment history.
- The flag is removed once you finish and get a clearance certificate.
Frequently asked questions
Can I rent a house or flat while under debt review?
Often, yes. Many landlords check your credit record, and some may be cautious about the flag. A record of on-time payments, proof of income and a good rental history can help your application.
Can I get a cellphone contract under debt review?
No. A cellphone contract is a form of credit, so you can't take out a new one while under debt review. Prepaid options are still available.
Can I open a bank account while under debt review?
Yes. You can still have a normal bank account for your salary and day-to-day spending. You just can't add credit facilities like an overdraft or credit card.
Will I be able to get a home loan after debt review?
It's possible. Once the flag is removed, banks look at your income, expenses and payment history. A good track record during and after debt review can help.
How long does the debt review flag stay on my record?
It stays for as long as you are under debt review. The flag is removed once you've paid off your debts and your clearance certificate has been issued.
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