Being removed from debt review can be an important step towards rebuilding your financial life. However, one common misconception is that your credit score will immediately increase once your debt review status has been removed.
This is not necessarily the case.
Your Credit Score Does Not Automatically Increase
When your debt review status is removed, the removal itself does not automatically give you a high credit score.
Your credit score is based on various factors contained in your credit profile, including your payment history, outstanding debts, credit utilisation, length of credit history and recent applications for credit.
As a result, two people who are both successfully removed from debt review may have very different credit scores afterwards.
What Does Change After Debt Review Removal?
The important change is that your debt review status is no longer preventing you from applying for credit.
Once the relevant court order or Clearance Certificate has been processed and your credit records have been updated, you may once again be able to apply for credit, subject to the normal affordability and credit assessment requirements of the credit provider.
However, being able to apply for credit does not mean that you are guaranteed approval.
A credit provider will still assess your credit profile, income, affordability, payment history and other relevant information before deciding whether to grant credit.
How Quickly Will Your Credit Score Improve?
There is no fixed period within which your credit score will recover.
For some consumers, improvement may occur relatively quickly once their credit profile is updated and they begin demonstrating positive credit behaviour. For others, rebuilding their credit profile may take considerably longer.
The most important factor is what happens after debt review.
Paying your accounts on time, keeping credit balances manageable and avoiding unnecessary credit applications can help you establish a healthier credit profile over time.
Should You Apply for Credit Immediately?
Not necessarily.
After spending years working towards becoming debt-free or exiting debt review, it can be tempting to immediately apply for a credit card, vehicle finance or other forms of credit.
It may be wiser to first obtain a copy of your credit report and check that your debt review status has been correctly updated.
You can then assess your overall financial position before taking on new credit.
The Bottom Line
Debt review removal is not the same as credit-score repair.
Removal of your debt review status can open the door to becoming credit active again, but your credit score will ultimately depend on the information contained in your credit profile and your financial behaviour going forward.
The goal should therefore not simply be to obtain credit again, but to rebuild a healthy credit profile and use credit responsibly.
If you would like to improve your credit score – by removing the debt review flag and building a positive credit hisotry thereafter – fill in our online application form. We will send you professional feedback shortly we receive your application.