How to Improve your Credit Score: After Debt Review

Many consumers are under the impression that they won’t be able to rebuild a healthy credit score after the debt review process.

However, this is far from the truth. As stated by the Head of Retail Credit at FNB, Hannalie Crouse says that banks perceive debt review as a positive because you’re taking action to clear your debt.

She further states that having credit accounts like a cell phone bill or insurance will help rebuild a healthy credit score. How do you build a healthy credit record after debt review? 

You can rest assured that your credit record will not be negatively affected due to debt review. Your creditors will appreciate that you’ve taken control of your finances. 

How does debt review affect your credit score? 

Debt review will have an impact on your credit score, but it’s nothing to be afraid of. Once you’re under debt review, you will be listed as ‘under debt review’ on all credit bureaus. This will prevent you from making more debt until you’ve settled all your existing debt accounts. 

This has been put in place by the National Credit Act (NCA) to help consumers become debt-free. If you make more debt while you’re under debt review, the process wouldn’t work.

When you’ve completed the debt review process and you’ve received your clearance certificate, your credit score  will be set back to zero. You will have a fresh start at rebuilding a healthy credit score. 

How can I improve my credit score after debt review? 

You will receive a clearance certificate within 21 days after completing the debt review process. Once this happens your name will be cleared from all credit bureaus and you can start rebuilding your credit record. 

Because you’re rebuilding your credit score from scratch, you’ll have to start with small credit accounts. You won’t be able to apply for larger credit accounts such as credit cards, a home loan or a car loan. You will have to build a reasonable credit score before you can start applying for bigger credit accounts again. 

We suggest that you start rebuilding your credit score with smaller credit accounts like a cell phone account, insurance accounts or open a store account. These types of accounts have a low barrier to entry which don’t require a perfect credit score.  

Once you’ve opened these types of accounts you have to ensure you pay all your accounts on time, every time. If you miss a payment or pay less than what is required, your credit score will be negatively affected.

Budgeting becomes crucial when rebuilding your credit record. Hannalie Crouse, Head of Retail Credit at FNB, says that it is important to manage your accounts carefully and avoid taking on too much credit. 

Can you get credit while being under debt review? 

You will not be able to get any credit while you’re under debt review. The National Credit Act (NCA) has prevented consumers from accumulating more debt while being under debt review as this would hinder the debt review process. You must avoid accumulating more debt while you’re under debt review. 

The reason for this is simple. It would be impossible to become debt-free if you continued making more debt while paying off all your existing debt.

Once you’ve settled all your current debt, you’ll be able to access credit again. 

If you would like to find out more about the debt review process please contact us. Alternatively you can leave your contact details below and one of our friendly consultants will contact you as soon as possible.