Does debt review affect credit scores? (Yes—here’s how)

Some people say: Debt review = bad for credit scores — but is it true?

Most people get a couple of things wrong when they think about this topic.

Allow us to explain exactly what debt review does (and doesn’t do) to your credit score.

You might be surprised by what you learn.

 

Does debt review affect credit scores?

Debt review does not directly lower someone’s credit score. Throughout the process, there is a temporary “debt review flag” on the applicant’s credit profile. Which means lenders aren’t allowed to grant access to new credit. Some South Africans mistakenly believe that this means debt review negatively impacts credit scores. The real impact varies from person to person and depends on the person’s credit behaviour. For some, it could improve their credit score, while others may experience a slight dip in the short term.

For many, debt review actually helps stabilise or improve their score over time by enforcing consistent repayment.

So, it’s not the review that hurts your score — it’s how you manage your debt around it.

 

 

Let’s break down what really goes on behind the scenes once you enter debt review.

 

Understanding the components

1. The debt review flag (credit freeze)

When you enter debt review, a flag is added to your credit profile by all major South African credit bureaus.

The flag:

• Does not impact the person’s credit score directly.
• Prevents lenders from approving new credit or loans, because the law does not allow them to do so while someone is under debt review.
• Remains until you receive a clearance certificate (Form 19). 

This is often referred to as a “credit freeze”. It’s temporary. And it protects debt review applicants from making things worse by taking on new debt while repaying the existing debt under a structured plan.

✔️ The debt review flag is just a temporary indicator. It doesn’t hurt the applicant’s credit score by default.

Now let’s look at what really affects someone’s score — how they handle repayments.

 

2. Credit behaviour

Take a look at these two examples:

Example A: The impact for someone missing payments before debt review

If you’ve already missed multiple payments, your credit score is likely already damaged.

Debt review won’t fix that immediately, but it can help you stabilise things. On-time payments and protection against legal action that can do more harm can introduce gradual improvement.

✅ In this case, debt review can have a positive effect from the start. 

 

Example A: The impact for someone making payments on time, entering debt review to ease the burden

If you’re managing payments (and not paying late or missing payments) but struggling financially, your credit score may still be in good standing.

While under debt review, the reduced payments might lead some creditors to report partial payments. While others report payments as “under arrangement”.

🟡 In this case, debt review could marginally lower the credit score in the short-to-medium term.

✅ But it’ll have a positive long-term impact on finances, which ultimately puts the applicant in a better position to build up an even stronger credit score.

 

 

3. Protection from legal action

Legal protection is an important factor. One that has massive upside potential. You see, legal action like judgments and legal defaults hit credit reports much harder than missed or partial payments.

From the moment your review is confirmed, creditors:

• Can’t repossess your car or assets
• Can’t apply garnishee orders to your salary
• Can’t issue summons or obtain court judgments

 

✔️ Here, debt review has an indirect positive effect from the start. 

⭐ Related content: What is the difference between debt review and blacklisted?

 

Example scenarios

Let’s bring this to life with two real-world examples South Africans can relate to.

Scenario A: Sam, already in trouble

Sam has missed multiple payments and received a S129 notice. Her credit score is getting worse each month.

After applying for debt review:

• Legal action stops
• The reduced repayment plan makes her debt affordable again. So she can pay on time.

 

Her score stabilises — and over time, improves.

 

Scenario B: Thabo, trying to stay afloat

Thabo’s not behind on payments, but he’s living paycheck to paycheck. His credit score is stable, but it’s at risk if things get worse.

After applying for debt review:

• He starts paying reduced amounts through a repayment plan.
• Some creditors might report these payments as partial.
• He’s on his way to being debt-free, which means he’ll have more money to build a strong credit score after debt review.

 

His score could drop slightly in the short term. But debt review will set him up to build an excellent credit score when he pays off his debt.

You see—it’s different circumstances, with the same benefit: structure, protection, and a way forward.

 

What will my credit score be after debt review?

After debt review, applicants’ credit scores vary. The individual’s credit score depends on where it was when they started debt review. Plus, how well they adhere to the process. Debt review applicants who stick with the process and pay their repayment in full and on time may see a slight improvement after debt review.

Many people see significant improvements in the first year after exiting.

We wrote a detailed answer in this post (check it out): What will my credit score be after debt review?

 

How to check if you are under debt review

To check your debt review status, pull your credit report from a registered credit bureau.

Look for a “Debt Review” or “Under Debt Counselling” marker or flag.

You can check your credit report for free any time with My Score Hero’s credit score app.

Or you can request one free credit report each year from:

• Experian
• TransUnion

 

What happens if your debt review is terminated?

Termination is not the same as completing debt review with a clearance certificate.

When debt review is terminated, it means the legal protection falls away, but the debt review status often remains on the credit profile. In other words, the flag stays on, but the protection is gone.

This can happen if:

• The consumer stops making payments under the repayment plan
• A creditor applies to the court to terminate the process
• The debt counsellor withdraws because the plan can no longer be maintained 

After termination:

• Creditors can start legal action again (judgments, garnishees, repossession)
• The individual may no longer benefit from reduced instalments or interest rates
• The debt review flag will not be removed unless a court declares the consumer no longer over-indebted (via a Form 17.W, or court order) 

If debt review is terminated before it’s completed, the person is still legally responsible for the full debt under the original terms. That means they may owe arrears, and creditors could get very aggressive.

*Having debt review terminated is not a way to end the debt review process. Check this out instead: How to get a debt review clearance certificate.

⭐ Related content: What happens if you miss, stop or can’t pay debt review?

 

How long does debt review last?

Debt review usually lasts between 3 to 5 years, depending on your debt amount and how much you can repay monthly.

Once all debts (except a home loan, if excluded) are settled and a clearance certificate is issued, the process ends. The flag is then removed from your credit profile within 21 business days.

Which may sound like a decent amount of time, but it goes by quickly. And without debt review, people typically tend to stay “stuck” for much longer.

⭐ Related content: How to clear your credit record

 

Final thoughts

There you have it — debt review doesn’t destroy your credit score. In many cases, it protects it.

Stay on top of your payments, avoid legal trouble, and rebuild your financial reputation step by step.

You’ve got options. You’ve got time. And now, you’ve got clarity.

If you want to talk to someone about managing your debt, we can help. Try our online assessment at My Debt Hero to see if you qualify to reduce your debt.