Life after debt review: everything you need to know

What happens at the end of debt review?

Going through debt review can be a life-changing journey toward financial freedom, helping you get back on track when you’re struggling with debt. But what happens after you’ve paid off your debt, and you're ready to move on? The debt review flag remains on your credit report, signalling to lenders that you were once under debt review. This can affect your creditworthiness and limit your access to credit, even though you’ve cleared your debts.

You’ve Paid Off Your Debt – Now What?

If you’ve completed your debt repayment plan, congratulations! You’ve worked hard to pay off your creditors, and now it's time to enjoy the benefits of your efforts. But before you can fully move forward, there’s one important thing left to do: removing the debt review flag from your credit report.

While your debts may be paid off, the debt review flag can linger on your credit record. It tells lenders that you were once under review, which may be seen as a risk factor. Removing this flag is crucial if you want to fully regain access to credit and improve your financial prospects. Your debt counselling can issue what is called a Clearance Certificate (A Form-19). This informs the credit bureau that you have concluded the debt review process and are now declared debt-free!

If you can't get hold of your debt counsellor, Meerkat are able to remove the flag on your behalf from as little as R1150. Click now to get started.

1. Access to Credit: A debt review flag can prevent you from qualifying for new loans, credit cards, or mortgages. Lenders see this as a risk, even if you’ve paid off all your debts. Removing the flag shows that you’re financially stable and can handle new credit responsibly.

2. Better Interest Rates: Once your debt review flag is removed, you may qualify for better interest rates. This can save you money in the long term, whether you're applying for a new car loan, home loan, or personal finance.

3. Improved Credit Score: A clear credit record free from the debt review flag boosts your credit score over time. This is essential for future financial stability.

4. Peace of Mind: Knowing that your credit report accurately reflects your financial situation brings peace of mind. You’ve worked hard to pay off your debt, and now your credit report should reflect that.

Can banks discriminate after debt review?

Banks care about your affordability and your payment history. They won't discriminate as the debt review flag will be removed from your profile and the only thing showing on your credit report should be your payment history.

Can you get a loan after debt review?

Yes, you can apply and get a loan after a debt review. If you’ve been diligently sticking to your debt restructured payment plan, you may be really eager to take out a loan for a home or a car. The good news is you will be able to apply for credit after debt review. 

How long after debt review can you buy a car or home?

Technically, you should be able to do so ONE week after receiving your Clearance Certificate. We advise waiting a little longer and monitoring your credit report for about 3-4 months. 

Moku Tip: remember how stressed and overwhelmed you were before applying for debt review? Remember those sleepless nights? We don’t want you to come back to the debt counselling process. Think very long before considering applying for credit again. 

How will debt review affect your credit score?

It’s also important to note that after debt review, your credit report will be updated and the only thing showing should be your payment history. Debt review is an opportunity to improve your credit score.

Moku tip: If any of the accounts that have been paid up show when you are doing your credit check, you should contact the credit bureaus or contact your previous Debt Counsellor at Meerkat. 

Is it possible to rent-to-buy a car under debt review?

Yes. What is often seen as a downside of the debt review process is that you can no longer take out credit. And, because it may take awhile to complete the debt review process, and then to build up your credit score to secure car finance or a home loan for example, you may have heard people talking about a rent to own option.

Rent-to-buy explained

The rent to buy method is the idea that you rent a big-purchase item like a car or house, with the intention of eventually buying it. Usually companies offer you a car, for example, at a monthly rental rate over a period of time. At any point during the term of the contract, you can buy the vehicle at, what they claim, is a reduced rate. Important to note:

• Your monthly rental fee may be more than a car monthly repayment. Do your research here.
• You will likely have to take out a loan to purchase the car. At this point, the car's value may be less than what you are actually paying for it.
• Because you are under debt review, you may not have the money available for another monthly payment. Here it is essential that you check with your Debt Counsellor whether this is really an option available to you.

Tips to build your credit score in a healthy way

So you've successfully completed the debt review process, now what? How do you slowly start building your credit score?

1. Open one or two retail (store) accounts or apply for a credit card. 

• If you can, don’t opt for store cards and a credit card. Choose one option.

1. Keep your credit usage on these accounts below 50%. For example, if retailer x gives you credit of R5000, you should look to spend less than R2500 of that amount. 
2. Make sure all your payments are made on time every month.
3. Monitor your credit report. 

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