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Life after debt review: everything you need to know

What happens after debt review?

If you’re reading this you may be nearing or have successfully completed the debt review process- congratulations! That’s amazing. To really unpack what happens next, you have to properly understand how you got to where you are, and that means taking a quick look at the debt review (debt counselling) process. 

A brief look at the Debt counselling process:

When you become a client of Meerkat, we contact the credit bureaus and your credit providers to let them know you are undergoing the debt review process. The credit bureaus then flag you as being under debt review on your credit report. Broadly, this means two things:

  • Creditors can no longer harass you over the phone.
  • To help you pay back your debt, you are no longer allowed to take out any further credit. This means that you won't be able to buy a car while you are under debt review.

Gain a deeper understanding of the debt counselling process

Once you’ve completed the debt review process, you are issued with a Clearance Certificate (Form 19). We then contact the credit bureau on your behalf again to let them know that you’ve successfully completed the process. Following this, they remove this debt review flag from your credit report.

Have you paid up all your debt, but still have a debt review flag on your credit report? We can get it removed for you.

Remove debt review >>

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 for 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. According to the National Credit Regulator (NCR), Credit Bureaus, however, have up to 21 days to update your profile. 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. 

View a free copy of your credit report.

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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