The debt review process is a rehabilitation program designed to stabilize a consumer's financial situation. Consumers burdened with debt who enter such a procedure will face a decrease in their credit rating, but this reduction may be less significant than if they continued to miss payments, as the procedure itself aims to help recovery from excessive debt and prevents the acquisition of additional credit.
Gawie le Roux of the Institute of Law explains that during the entire debt review process, information will be noted in the credit report, which will significantly lower the credit score.
According to the recently published FinScope South Africa 2025 Consumer Survey by FinMark Trust, the number of adults actively using credit increased from 29.4 million in 2024 to 30.7 million in 2025, and installment purchases rose from 18% to 24%. FinMark Trust notes that consumers are increasingly preferring immediate access to goods via credit rather than saving up through installments, demonstrating how short-term financial pressure changes financial behavior.
Reasons for Rating Decrease
During the first two months of the debt review process, payments do not go directly to creditors, which leads to a drop in the rating. However, Benay Seeger, CEO of DebtBusters, argues that this may be less detrimental than continuing to miss payments while remaining in a state of over-indebtedness. In the first two months, restructuring fees related to the process costs must be paid.
According to Seeger, this complies with the National Credit Act, as creditors cannot seize property until the consumer is more than 60 days behind on payments. He also emphasizes that the initial rating drop is not permanent, and provided the plan is adhered to, it corrects itself over time, as regular payments can lead to an improved credit rating within 12–18 months. Seeger adds that any missed payments, naturally, will lead to a rating decrease, which is normal.
However, as Rowan Brides, Director and Debt Consultant at Debt Solutions 4U, says, the change is not limited to the rating. During the review process, the debt review status becomes more important to the consumer profile than the score itself.
Brides states: "The first thing I would say is that once someone enters debt review, their credit rating becomes largely irrelevant for making immediate financial decisions, and only becomes relevant again after exiting the process."
Rating or Status?
Rene Munsami, Director of the National Association of Debt Consultants, explains that when a consumer enters debt review, they generally lose the right to obtain additional credit, so their credit rating may effectively drop to zero or cease functioning normally while under this control.
The National Credit Act prohibits a consumer who applies for debt review from acquiring additional services from a credit institution or entering into other credit agreements during this process. Brides notes: "Thus, regardless of whether their score is 720, 699, or 550, in the short term it is largely academic. The main thing is that they are within a formal debt restructuring process."
The National Credit Regulator (NCR) confirmed in its June 2025 guidance that creditors are obliged to continue providing payment records to credit bureaus throughout the process. Brides points out that payment behavior continues to be recorded, and payments made through the Payment Distribution Agency are reflected in the consumer's payment profile.
When consumers consistently and timely make the payments required under the restructured agreement, they build a history of fulfilling these obligations, although Brides warns that one should not expect a sudden improvement in the rating during debt review. The NCR reports that upon issuance of the discharge certificate, only the debt review flag and the default information that preceded or triggered the debt review are annulled; the payment profile history formed during the process remains in the records, so consistent payments matter.
The Bigger Picture
Brides advises consumers not to view changes in their rating in isolation from the circumstances that led them to debt review. He asserts that "debt review can protect a consumer from much more serious consequences of uncontrolled over-indebtedness."
In Brides' opinion, if a consumer is truly in a state of over-indebtedness, they should question whether their current repayment obligations are sustainable. Brides cautions against assuming that any movement in the credit rating is caused by debt review, as different bureaus and scoring systems may yield different results, and the rating can change for other reasons.
He insists: "Do not enter debt review assuming it will improve your credit rating. And do not avoid debt review simply because you are afraid your credit rating will drop." Brides adds: "If someone is truly over-indebted, the question is whether their current repayment obligations are sustainable. The credit rating is a symptom. Accessibility is the core problem."
Seeger agrees with this viewpoint, stating: "You must consider what is best for you in the long run: suffering from debt or protecting your rating." He adds that "their ratings fall on their own because they cannot make ends meet."
Munsami notes that the initial months should not be seen merely as a period where fees cause a drop in the credit rating. After exiting debt review, the credit bureau may recalculate the rating based on the overall consumer credit profile, including factors such as outstanding balances, repayment history, and other credit behavior. Munsami concludes: "Debt review is a rehabilitation process designed to stabilize the consumer's finances, structured debt reduction, and ultimately, place them in a stronger position to rebuild their credit profile after successfully completing the process."
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