How will a debt management plan (DMP) affect my credit score?

Last Modified 16th of February 2021

A debt management plan (DMP) can be a very effective and realistic way to become debt-free. Once you’ve cleared your debts and ensured your credit record demonstrates this accordingly, you’re free to start improving on your credit rating. But how will a DMP affect your credit score? Find out here…

DMP on your credit record

It’s completely up to the creditor whether your DMP appears on your credit record. Some will request that you have one, while others won’t – it all depends on each individual lender. This, in turn, can stop you from getting more credit – which is a good thing if you’re on a DMP!

The fact you have a DMP on your credit file shows potential creditors you’re far less likely to make repayments. However, some lenders may see a DMP as a good aspect compared to unsettled debts and defaulted accounts. The DMP may stay on your credit record for several months after you settle you debts – which could limit you from applying for more credit.

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Reduced payments

A DMP means you’re making smaller payments to each of your creditors – as you split the lump sum between multiple lenders. This can affect your credit rating if a creditor hasn’t agreed to the repayment plan but you’re still going ahead with it anyway. They will mark it as a missed payment and it could stay on your credit record for up to 6 years. A DMP isn’t legally binding so creditors can still add defaults to your account, as well as County Court Judgements (CCJs). The latter is less common as even if the creditor hasn’t agreed to the repayment plan, they’re still receiving payments from you.