A credit score is a record of how well a consumer pays back his debts. When a debtor fails to repay his obligations, he builds a poor credit score that can negatively affect his ability to obtain loans from entities such as credit card companies and banks. A credit amnesty is an offer to ignore a person’s bad credit.
Monetary Credit Amnesty
The term “credit amnesty” usually refers to freedom from the negative consequences of building a bad credit record. For example, some car dealerships refer to programs extending auto loans to consumers with bad credit as credit amnesty programs. In rare cases, governments extend credit amnesty programs to their entire population. The South African Cabinet recently approved a general credit amnesty to more than 1 million citizens, effectively wiping clean their credit records.
College Credit Programs
In some cases, the term “credit amnesty” can be applied to forms of credit other than monetary credit. For example, some schools offer credit amnesty programs whereby students with poor academic records can have them expunged after a certain period of time.