What Happens to Your Credit Score While Under Debt Review?

By Willem Nel – Registered Debt Counsellor

If you are considering debt review, one of the first questions you will ask is: “What will happen to my credit score?”

As a Registered Debt Counsellor, I regularly advise consumers who are concerned about their credit profile, future lending ability, and long-term financial reputation. This article explains, in clear and practical terms, what really happens to your credit score when you enter debt review under the National Credit Act (NCA).

Understanding Debt Review in South Africa

Debt review is a formal legal process introduced by the National Credit Act to assist over-indebted consumers. When you apply for debt review:

• A Registered Debt Counsellor assesses your financial position.
• If you are found over-indebted, your accounts are restructured.
• A new affordable repayment plan is negotiated with your credit providers.
• Legal protection is provided against repossession and legal action (if you comply).

Debt review is not debt forgiveness. It is a structured rehabilitation process.

What Immediately Happens to Your Credit Score?

1. Your Credit Profile Is Flagged

Once you are formally placed under debt review, all major credit bureaus, including TransUnion and Experian, update your profile with a “Debt Review” status.

This means:

• You cannot apply for new credit.
• Your credit score will drop.
• Lenders can see that you are under formal restructuring.

This drop is not a punishment — it reflects increased lending risk while you are under the process.

2. You Cannot Take New Credit

Under the National Credit Act, you may not incur new credit while under debt review.

From a scoring perspective, this means:

• No new credit enquiries.
• No new credit accounts.
• No additional risk exposure.

While your score may initially decline, the absence of new debt often stabilises your profile over time.

Why Your Credit Score May Improve During Debt Review

This is where many consumers are surprised.

Although your score initially drops, debt review can improve your financial behaviour profile because:

• You make consistent monthly payments.
• Accounts move from “arrears” to “paid as per arrangement”.
• Legal action and judgments are prevented.
• Repossessions are avoided.

Credit scoring models reward consistent repayment behaviour. Over time, your payment history strengthens, even though the “debt review” flag remains active.

What Happens When You Complete Debt Review?

Once you have:

• Paid up all short-term credit (credit cards, personal loans, retail accounts), and
• Settled your mortgage (if applicable),

Your Debt Counsellor issues a Clearance Certificate (Form 19).

The credit bureaus must then:

• Remove the debt review flag.
• Update your profile accordingly.
• Allow you to re-enter the credit market.

At this point, your credit score can recover significantly — often stronger than before, because you have demonstrated long-term financial discipline.

Does Debt Review Permanently Damage Your Credit Score?

No.

Debt review is not blacklisting. In fact, “blacklisting” is not a legal term under the National Credit Act.

Your credit score impact is:

• Temporary while under review.
• Recoverable after clearance.
• Often better than the alternative of judgments, repossessions, or sequestration.

If you avoid debt review and continue defaulting, your credit score can suffer far more severe and long-term damage.

Debt Review vs. Legal Action: A Credit Perspective

Let’s compare outcomes:

Scenario	Credit Score Impact	Long-Term Effect
Ignoring debt	Severe decline	Judgments, repossession, black marks for years
Sequestration	Major long-term impact	5–10 years negative profile
Debt Review	Temporary decline	Structured recovery and rehabilitation

Debt review is designed as a rehabilitation mechanism — not a punishment.

Key Takeaways

✔ Your credit score will drop when you enter debt review.
✔ You cannot take new credit while under review.
✔ Consistent payments can stabilise your profile.
✔ Once completed, your credit score can recover strongly.
✔ It is legally regulated under the National Credit Act.

Professional Advice from Willem Nel

As a Registered Debt Counsellor, my advice is simple:

Your credit score is important — but financial stability is more important.

If you are struggling with repayments, protecting your assets, preventing legal action, and restoring long-term financial health should be your priority. A temporary impact on your credit score is often the responsible trade-off for structured rehabilitation.

If you would like a confidential assessment to determine whether debt review is appropriate for your situation, professional guidance can help you make an informed decision.

Willem Nel
Registered Debt Counsellor
Helping South African households regain financial control through structured, legal debt solutions.