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difference between debt review and blacklisted

The difference between debt review and blacklisted is explained in detail in. To understand what the difference is between the two, you have to understand what each means. First we start with blackisting.

Blacklisting

Blacklisting is an outdated term that refers to the olden days when you would have negative information kept about you with the credit bureaus. This type of system went out of use more than 10 years ago and has not been valid since the early 2010s.

So in short, there is no such thing as being blacklisted by the credit bureaus anymore.

The understanding was that if you were blacklisted and your negative information was kept on record, you would not get credit at all.


Creditworthiness and Credit Score

In the current day and age, your creditworthiness is determined but a combination of all the information that credit bureaus have about you. Good credit decisions add to your creditworthiness, and bad credit behaviour impairs your creditworthiness.

This metric is then summed up into what we commonly  known as a credit score, which is an easy way for you to get an idea of your creditworthiness and for credit assessors to easily determine how likely you are to pay your debts on time.


Debt Review

According to Online Business Guide:

“Debt review, also known as debt counselling, is a formal debt relief process that helps consumers who are struggling to support themselves while paying off their credit debt to meet their debt obligations.

Debt reviewers communicate directly with their clients’ creditors to renegotiate repayment terms and reduce interest rates to establish a more manageable and structured payment plan for their clients.”

So debt review is a solution put in place to help those who are so far in debt that they do not have enough to pay their debts. If left alone, the debt keeps growing (because of interest). So the government put a process in place that would allow people in debt get help that will allow them to restructure the debt to greatly reduce the interest costs and allow them to pay their debt.

The upside is that all your debts are bundled into one debt with a lower interest rate

Your assets are protected from creditors when you are under debt review.

The downside is that you are not able to take on new debt when you are under debt review.

So for the period that it takes you to pay off the restructured debt, no registered credit providers can loan you any money.


To sum up the difference between debt review and blacklisted

The difference between debt review is that blacklisting used to be the presence of negative information that will prevent you from getting credit. Debt review is a process of debt consolidation and counselling for people who have more debts than they will be able to pay.

Blacklisting is no longer a thing. For you to qualify for debt review, your credit profile is likely already impaired. And at the point of being over-indebted, debt review is a solution that is put in place to avoid the situation from getting even worse because you cannot afford to pay off the growing debt.

If you are over-indebted and need help from experts, contact us through our contact form or send us a WhatsApp to start getting your finances back on track.

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