How Long After Debt Review can you Apply for Credit?
If you're wondering how long debt review lasts, how long after you've completed the process you can start applying for credit, and exactly how you can leave the debt review process, you won't have to wonder any longer. We'll tackle all these questions and more in this blog post.
What is debt review?
Before we answer how long after the debt review process you can apply for credit, let's first get clear on what the process is.
Debt review or debt counselling refers to the same debt relief process that was introduced by the National Credit Act (NCA) to help over-indebted consumers. It's a way of consolidating all your debt without taking out a consolidation loan. It can also be a way of reducing interest rates on your existing loans.
Read more about the process here.
How long does debt review stay on your name?
Once you've applied for debt review, the debt review flag will remain on your credit record until you have successfully completed the debt review (debt counselling) process. You will also have to get issued with a debt review clearance certificate to indicate to the credit bureaus that you are no longer in the process.
There is not a set period for everyone as the time it takes is dependent on:
- how much debt you have
- how much money you can afford to pay each month
- your repayment terms
The debt review process usually lasts between 3-5 years.
What happens if you stop paying debt review?
If you stop making your monthly payments for debt review, creditors can pursue legal action against you because you have adhered to your repayment plan. Read this blog post to find out more.
What is a debt review clearance certificate?
A debt review clearance certificate often goes by a few names such as:
- debt clearance certificate
- credit clearance certificate
- Form 19
In essence, a clearance certificate for debt review (Form 19) is a formally recognised document introduced by the National Credit Regulator (NCR) that confirms that you have successfully completed the debt review process. If you've ever wondered how you get clearance from credit bureaus, the key is with this document.
Obtaining a clearance certificate, is also the only way you can legally exit the debt review process.
To remove debt review, all your outstanding debt, other than your home loan, must be paid up. This outstanding debt includes credit card debt and any other debt that was included in your debt review repayment plan.
Read the article to find our more about debt review removal.
Watch this video with our Founder & CEO to find out more about the debt review removal process:
How Long After Receiving My Clearance Certificate can I Apply for Credit Again?
Once you've successfully completed the debt review process, you can technically apply for credit one week after receiving your debt review clearance certificate.
How long does it take to clear your name from a credit bureau?
However, because credit bureaus may take some time before updating your credit profile, we recommend waiting for about 3-4 months after receiving your debt review clearance certificate before applying for credit. During this time, you can monitor your credit report to see if the debt review flag is still on your profile.
Can banks discriminate after debt review?
A reason some people may not want to register for the debt counselling process is because they fear that it would hurt their chances of applying for credit in the future. This is not the case. Debt review is actually an opportunity for improving your credit score.
Before approving a loan application, banks will retrieve your credit report to check your affordability. Once you’ve completed debt review, and credit bureaus have updated your report, the only thing showing should be your payment history.
If you want to know more about debt review (debt counselling) including:
- debt counselling fees
- who pays the debt counsellor
- how the process works
- if it would be a good idea for you, read this blog post.
How long after debt review can you buy a car?
While you should technically be able to apply for credit one week after receiving your National Credit Regulator (NCR) clearance certificate, as mentioned earlier, you have to take the following into account:
- Credit bureaus may take some time to update your profile. Banks retrieve credit reports from credit bureaus so it is essential that your report has been updated before applying for a loan.
Read the article to find out more about life after debt review.
Who is Meerkat?
MyMeerkat FSP is an authorised financial services provider (FSP 50979). We have successfully helped thousands of South Africans get out of debt and remove the debt review flag.