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Will I qualify for credit after debt review?

A Fin24 user who has undergone debt review to rehabilitate herself of debt wants to know if she'll qualify for credit to buy a house or a car after the debt review process ends. She writes:

I have voluntarily placed myself under debt review. I am close to finishing this process and would like to know how this would affect my application to purchase a car or house for that matter.

As you have indicated, upon successfully completing the debt counselling process, i.e. all your debts are considered paid up, your debt counsellor shall furnish you, your credit providers and all credit bureaus with a clearance certificate.

The experts at Summit Financial Partners respond:

The purpose of the clearance certificate is to confirm that you have indeed settled all your accounts and been successfully rehabilitated.

Once the clearance certificate has been issued and processed by both the creditors and bureaus, the debt counselling flag (usually used to decline credit applications upfront) should no longer show on your credit report.

READ: How long for credit record to clear after debt review?

This essentially means you may approach different credit providers and freely apply for either vehicle or housing finance or any other credit line for that matter. Once your credit application has been lodged, the banks' scoring models will kick in and the approval of the loan(s) will be at their discretion as always - as far as the National Credit Act is concerned, your debt review history should not prejudice your application in any way.

Whether a cooling off period will be considered in the granting of the loans for clients exiting debt counselling is something we do not know for sure as credit granting rules are usually very confidential.

Hope this helps!

*Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

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