Will I End Up Under Debt Review If I Apply for a Debt Consolidation Loan?

Many South Africans hesitate to apply for a debt consolidation loan because they believe it might automatically place them under debt review.
This is not how debt consolidation works.
To properly answer this concern, we need to understand how a debt consolidation loan functions under South African credit law and what actually determines whether someone qualifies.

How a Debt Consolidation Loan Works in South Africa

In South Africa, all debt consolidation loans must comply with the National Credit Act (NCA). This means lenders are legally required to ensure that a client is not over-indebted before granting a loan.

To qualify for a debt consolidation loan, a client must generally meet two key criteria:

Have a credit score above 650
Have a debt-to-income ratio below 40%

These are not optional guidelines. They are risk and affordability standards used across the industry.
And these are also the two biggest reasons why most people do not qualify for a debt consolidation loan.

Let’s break this down.

1. Credit Score – The First Gatekeeper

Your credit score is calculated using:

Your payment history
How much of your available credit you are using
How many recent credit enquiries you have made
Your overall credit behaviour

Many people only start looking for debt consolidation once they are already in financial distress. By that time, they may already have missed payments or defaulted on accounts.

Once your credit score drops below 620, approval becomes extremely unlikely. You can apply repeatedly, but the result will remain the same: declined.

There is no quick loan fix for a poor credit score.

From a lender’s perspective, a low credit score signals high risk. If you have already failed to honour agreements with current lenders, new lenders are not willing to take that risk.

Before qualifying for a loan, your credit reputation must be repaired.

2. Debt-to-Income Ratio – The Second Barrier

The second major factor is your debt-to-income ratio. This measures how much of your monthly income goes toward paying debt.

To qualify for a debt consolidation loan, your debt repayments should generally be less than 40% of your income.
From our experience, over 80% of applicants exceed this limit.

Some clients are living with a debt-to-income ratio of 70% or even 80%. That means most of their income is already committed to repaying debt, leaving very little for living expenses.

When someone depends on credit to survive, lenders see extreme risk. The chances of default are high, and creditors are not prepared to take that gamble.

This is why many applications are declined.

Understanding these two criteria — credit score and debt-to-income ratio — is critical. They determine whether a lender can legally and responsibly grant a debt consolidation loan.

Once you understand this, the original concern starts to change. The issue is no longer about whether consolidation leads to debt review. The issue is whether your financial profile allows for a consolidation loan in the first place.

So Let’s Reframe the Question

The real question is not:
“Will this debt consolidation loan put me under debt review?”

The correct question is:
“Does my financial position mean I do not qualify for a loan?”

Debt consolidation loans do not place you under debt review.
Your financial position determines what options are available.

If you qualify, you receive a loan.
If you do not qualify, alternative solutions are considered.

What Happens If You Don’t Qualify?

If your credit score is low and you are over-indebted, your alternative is debt restructuring.

This includes:

Debt mediation
Debt review
Sequestration

Debt restructuring is not a punishment. It is the legal alternative when a loan is not possible.
There is no way to consolidate debt with a loan if you do not meet affordability and credit criteria.
This is when many clients choose debt review.

Why Clients Choose Debt Review

After understanding their situation, many clients realise debt review is the right path forward.

Here’s why:

It does not increase credit exposure

Debt review works with existing debt. It does not add more debt to an already strained situation.

Interest is often reduced

Under debt review, interest rates can be reduced. Clients often repay significantly less than they would have under continued high-interest arrangements.

It forces healthier credit behaviour

Debt review removes access to additional credit, which forces budgeting and disciplined financial behaviour.
For many, this becomes a turning point.

It still achieves one affordable monthly payment

Clients pay one structured, affordable instalment without increasing their total debt exposure.
It provides breathing room and reduces stress.

Why We Created the Debt Consolidation Assessment

After more than 10 years of processing debt consolidation loans, we faced an undeniable reality:

Most people applying for debt consolidation loans did not qualify.
Many didn’t understand why.
Many kept applying repeatedly.
Many damaged their credit further with unnecessary enquiries.
Some even fell victim to loan scams.

We knew something had to change.

So instead of allowing blind applications, we implemented a structured debt consolidation assessment.

How Our Assessment Works

Once you complete the assessment form or loan application, your details are directed to a debt consolidation specialist.

Our partners first conduct a full affordability and credit review before any loan submission takes place.

If you meet the criteria:

You are matched with suitable lenders.

If you do not meet the criteria:

You are provided with structured debt restructuring options.

Every client receives honest feedback based on their actual financial position.

How This Has Helped Clients

Our approach has saved clients from:

Unnecessary credit checks

Before implementing this process, many clients applied repeatedly online, hoping for approval. Each enquiry impacted their credit profile.
Now, they receive guidance before any submission.

Loan scams

Clients now understand why they may not qualify. This protects them from scammers promising guaranteed loans in exchange for upfront fees.
Knowledge protects people.

Final Answer: Will You End Up Under Debt Review?

No.
A debt consolidation loan does not place you under debt review.

However, if your financial position shows that you are over-indebted and do not qualify for a loan, debt restructuring may be the responsible and legal solution offered.

The outcome depends on your credit score and affordability — not on applying for a consolidation loan.