17 Oct How Debt Review Affects Your Credit Score Long-Term
In the pursuit of financial freedom, entering debt review is a crucial step toward overcoming overwhelming debt. Life is meant to be lived and enjoyed, and money problems can be crippling. Like anything life-changing, you should take the time to understand the process of debt review before applying. You may consider how debt review affects your credit score long-term and be surprised by the answer.
Understanding Debt Review
To understand how debt review will impact your credit score, you first need to know how it works. Introduced by the National Credit Act (NCA), debt review, also known as debt counselling, is a lifeline for overdue accounts. Our team of debt counsellors will assess your finances to determine if you are over-indebted. If you are, we plan a new debt repayment plan that essentially consolidates all your existing debt responsibilities into one monthly repayment that aligns with your affordability.
Through professional negotiations and careful consideration, you benefit from instant financial relief and avoid blacklisting with professional help.
Your Credit Score and Debt Review
At the start of debt review, your credit report is flagged, stopping you from acquiring further credit until your debts are fully repaid and you are issued a debt clearance certificate. Your credit score may temporarily drop, but you won’t be accumulating new debts during this process, which will help strengthen your credit score over time. Can you be safe from creditors under debt review? The answer is yes. You are protected from creditors and legal actions during the process.
When it comes to how debt review affects your credit score long-term, it depends on you. If you’ve consistently repaid your debts during debt review, you could see an improvement in your credit score after debt review. The most significant improvement, however, is likely to occur in the year following debt review completion. This is a key time for rebuilding your creditworthiness through smart credit behaviours.
Debt Review Protects You
While your credit report will initially take a knock, and the debt review flag will limit your access to new credit, this process ultimately protects you from damaging your credit score further. While you work towards repaying all your debts, you are also avoiding new debts that could potentially be very damaging. You learn to live life according to your means and can enjoy the relief that debt review brings.
Are you ready to put an end to the cycle of debt problems in your life? Let our team of National Credit Regulator (NCR) registered debt counsellors help you. We’re here to guide you through every step of the process and answer any questions you might have. CONTACT US today to get started.