About Us Contact Us Debt Management Companies Do I Qualify For Debt Management Debt Management Forum How will a DMP affect my credit rating?

As debt advisors, sometimes we are asked by clients about the effect of a Debt Management Plan (DMP) on an individual’s credit score. It is important to note that most clients are more concerned with finding a way to manage their debts in the most affordable way available. Concern about the effect on a credit rating is usually a secondary DMP consideration.

The main objective of a DMP is to help clients who are already experiencing difficulty managing their debts reduce their monthly payments to creditors. At this stage the client may already have a credit score which has been negatively affected by late payments; this will continue to impact the credit score even after someone enters into a DMP.

Once an account is in arrears the creditor may feel obliged to issue a Default Notice, this is formal notification that you are in arrears and will stay on your credit file for 6 years. Having a default notice on your credit file will generally have a negative impact on your credit rating.

When an arrangement has been reached with a creditor as part of a DMP to repay the debt at a mutually satisfactory rate, the creditor will often update the credit file to reflect the fact that the account is being repaid at a rate lower than the original contractual rate. As such, the credit file may be marked as “on arrangement to pay” or “on arrangement”. This will distinguish the account from one where somebody is making no effort to pay at all.

A common problem is inaccurate information held on credit reports. It is advisable to check your credit report with one of the main credit reference agencies if this is a concern for you.

Sometimes there can be information on your credit report connecting you to a member of your family or a housemate who lives at the same address. If this is the case, and your financial affairs are not connected, you can file a “notice of disassociation”. This asks the credit reference agency to disassociate you from them in terms of your credit records. This will prevent someone else losing their ability to obtain credit as a result of your debt difficulties or DMP.

Once your debts have been repaid via a DMP (debt management plan) your credit rating will recover, assuming that you make responsible and careful use of credit. Particular attention to paying bills on time is required and many people find that direct debits are extremely helpful in this respect.

For trustworthy information, advice and support regarding your DMP, please visit the debt management plan forum.

 

Latest News

Beverley Budsworth Phil Corfield Debt Management Plan Expert DMP Adviser
Quick Reply Form

Use this reply form to find out which debt solution options, including Debt Management Plans, are available for you. Information you provide is used only to provide you with advice and is never passed to thrid parties for marketing purposes.

 
 
 
Complaints Procedure | Other Sources Of Help | Credit Rating | Forum Rules | Terms of Use | Privacy & How We Use Cookies
(c) Channel Active Limited. Company Number: 06412452. Authorised and regulated by the Financial Conduct Authority. Data Protection Registration: Z1332750.
Please note that telephone calls may be monitored or recorded.