How does debt review affect my credit score?

Debt review does not lower your credit score in the way a missed payment does. It replaces your score with a status. From the moment your debt counsellor notifies the credit bureaus, your record carries a debt review flag, and any credit provider that checks you sees that flag before it sees anything else. While the flag is there, the National Credit Act 34 of 2005 prohibits credit providers from granting you new credit, so a good or bad score makes no practical difference. The flag comes off when your counsellor issues a clearance certificate, and that is when your score starts to matter again.

If you are still deciding whether to apply, this guide explains what the flag does, what it does not do, and what your record looks like on the other side. If you are already under review, it explains what to check now so that nothing follows you out.

How a credit record works before, during and after debt review

A credit bureau keeps a file on you. It records your open accounts, your payment history month by month, any defaults or adverse listings a credit provider has reported, any court judgments, and any enquiries made by credit providers. A credit score is a number the bureau calculates from that file. Different bureaus use different formulas, and credit providers apply their own scoring on top, so there is no single "official" score.

Before you apply. Most people who apply for debt review already have a damaged record. Late payments, accounts in arrears and adverse listings are usually what drove the application. Those entries are already on the file and debt review does not remove them.

When you apply. Your debt counsellor must notify every credit provider and every registered credit bureau within a few business days of accepting your application. The bureaus then place a debt review indicator on your record. From this point, a credit provider that pulls your record is told you are under debt review.

While the plan runs. Your restructured accounts continue to be reported to the bureaus, but under the terms of the plan rather than the original agreements. If you pay the payment distribution agency every month and it pays the credit providers, those accounts should be reported as paid according to the arrangement. If you miss a payment, that is reported too.

When you finish. Once the debts under the plan are settled, or everything except an up-to-date home loan is settled, your counsellor issues a clearance certificate and sends it to the bureaus. The bureaus must remove the debt review flag. Your file then shows the history of the accounts, but not the flag.

A worked example

Take Nomvula, who earns R16 000 a month after tax. In early 2024 she had a personal loan, a credit card and two store accounts with a combined balance of R110 000. She had missed several instalments and two of the accounts were listed as in default. She applied for debt review and her counsellor flagged her record.

For the next three and a half years her file shows the flag, four restructured accounts, and a monthly payment history under the plan. In the second year she applies for a cellphone contract on impulse. The application is declined within minutes because the provider sees the flag. Nothing else happens, but the enquiry is recorded.

In late 2027 her last account is settled and her counsellor issues the clearance certificate. The flag comes off. Her file still shows the old default listings from 2023, because those are governed by the retention rules for adverse information, not by the clearance certificate. She opens a small clothing account, uses it lightly and pays it in full each month. Within a year or two of steady reporting her score has climbed. These figures are illustrative only and your own record and timeline will differ.

What to do this week

If you are thinking about applying. Pull your free annual credit report from at least one registered bureau before you sign anything. Note every listing, every judgment and every account. Your counsellor needs the full picture, and you need to know what is on the file before the flag goes on top of it.

If you are under review now. Ask your counsellor for a copy of the notification sent to the bureaus and the date it went out. Ask the payment distribution agency for your latest statement and check that every account is receiving its share. Then pull your credit report and confirm that the restructured accounts are being reported as paid under the arrangement.

If you have finished. Get the clearance certificate in your hands, not just a promise that it has been sent. Pull your report from every registered bureau. If the flag is still showing, lodge a dispute with that bureau and attach the certificate. Our guide on disputing a listing on your credit report walks through the process.

Documents to gather

• Your credit report from each registered bureau, dated within the last month.
• The debt counsellor's notification to the bureaus and to the credit providers.
• The court order or National Consumer Tribunal order confirming the restructured plan.
• Monthly statements from the payment distribution agency for the full period.
• Settlement letters from each credit provider once an account is paid.
• The clearance certificate, once issued.
• Any decline letter you have received from a credit provider, because it shows what they saw on your file.

A realistic timeline

Week 1 after applying. The flag appears at the bureaus. Calls from credit providers usually slow down within days.

Months 1 to 4. The plan is negotiated and made an order. Your file shows the flag and the accounts as under review.

Years 1 to 5. Accounts fall off the plan as they are settled. Each settlement should be reported to the bureaus. Keep every settlement letter.

Clearance. Your counsellor issues the certificate. The bureaus must remove the flag once they receive it. In practice, allow a few weeks and then check each bureau yourself.

The two years after clearance. This is the rebuilding period. There is no shortcut. A short history of small accounts paid on time is what moves a score.

Our guide on how long debt review takes has more on the stages.

Common mistakes and what they cost

Applying for credit while flagged. The application is declined, the enquiry is recorded, and a pattern of enquiries can count against you later. It can also give a credit provider grounds to argue that you are not co-operating with the process.

Assuming the flag comes off by itself. Bureaus act on the clearance certificate. If your counsellor does not send it, or a bureau does not process it, the flag stays. Every month it stays is a month you cannot rebuild.

Ignoring the accounts you left off the plan. An account that was not included keeps reporting on its own terms. If it goes into default, that listing goes on your file alongside the flag.

Confusing clearance with a clean file. Clearance removes the flag. It does not remove the missed payments and defaults from before you applied. Those are subject to the retention periods in the regulations. Ask the bureau what remains and when each item is due to fall away.

Paying a "credit repair" service to remove accurate listings. No one can lawfully remove accurate information before the retention period ends. If a listing is accurate, the money is wasted.

Your rights and the credit provider's rights

You are entitled to one free credit report a year from each registered bureau, to see everything held on your file, to dispute anything that is inaccurate, and to have the debt review flag removed once a valid clearance certificate is issued. Under the Protection of Personal Information Act 4 of 2013, the bureaus and the credit providers must handle your information lawfully and accurately.

A credit provider is entitled to check your record before granting credit, to decline you while the flag is on, and to report accurate payment history, including missed payments under the plan. It is also entitled to report the original defaults that led to your application. What it may not do is report information it knows to be inaccurate, or keep reporting the flag after it has been notified of your clearance.

If you cannot afford an attorney

Most credit record problems after debt review do not need an attorney. The free routes work well for them.

Start with the bureau's own dispute process, which is free and must be answered within a set period. If the bureau does not resolve it, the Credit Ombud, now part of the National Financial Ombud Scheme South Africa, handles complaints about credit bureaus and credit providers at no cost. The National Credit Regulator on 0860 627 627 takes complaints about debt counsellors, including a counsellor who will not issue a clearance certificate you are entitled to. Legal Aid South Africa on 0800 110 110 can tell you whether you qualify for help if a credit provider takes you to court, and our legal aid page explains the means test. Our page on what debt and credit matters cost sets out what to expect if you do need a professional.

Frequently asked questions

People often ask whether they should pay off accounts early to protect their score. Paying early shortens the plan and brings clearance closer, which is what actually lifts the flag. It does not change the score while the flag is on.

They also ask whether their spouse's record is affected. Only if the spouse is a party to the accounts or to the application. A spouse married in community of property may need to be part of the application, and your counsellor will advise on that.

Finally, people ask whether a credit provider can see that they were once under debt review after clearance. The flag itself is removed. The account history remains for the retention period, so a careful reader of your file may work it out from the pattern of restructured payments, but there is no lawful basis for a credit provider to treat you as still under review once the certificate has been issued.