How Will a Debt Management Plan (DMP) Affect My Credit Score?
Published 20th of September 2016·Updated 7 April 2026
Reviewed by: Reviewed for accuracy April 2026
A debt management plan (DMP) will almost certainly affect your credit score, because you are making lower payments than originally agreed and your creditors may record this as missed or reduced payments on your credit file. However, for many people already struggling with debt, the damage to their credit score is less important than becoming debt-free - and the credit impact is temporary.
Short Summary
A DMP is not a legally binding agreement, which means creditors can still add defaults, markers or County Court Judgements (CCJs) to your account even while you are making payments through the plan.
Whether a DMP appears on your credit file depends on each individual creditor. Some will record reduced payments; others will add a default marker. The worst-case entry - a default - stays on your credit file for six years from the date it was recorded, regardless of when you settle the debt.
After you complete your DMP and your debts are cleared, you can begin rebuilding your credit score. Many people see meaningful improvement within one to two years of completing a plan, according to StepChange.
A DMP arranged through a free charity such as StepChange or PayPlan costs you nothing. Commercial debt management companies charge fees, which reduce the amount reaching your creditors each month.
Does a DMP appear on my credit file?
There is no single "DMP marker" that appears on your credit file. What appears depends on how each individual creditor chooses to record your account.
Some creditors will mark your account with a "reduced payment" or "arrangement to pay" flag. Others will add a default, which is more serious. A default is recorded when a creditor considers the relationship broken - typically after you have missed several payments or agreed to pay less than the contracted amount.
| Credit record entry | How long it stays | Impact on borrowing |
|---|---|---|
| Arrangement to pay / reduced payment | Until the account is settled, then 6 years | Moderate - shows as a negative marker |
| Default | 6 years from the date of default | Significant - most lenders will decline applications |
| County Court Judgement (CCJ) | 6 years from the date of judgement | Severe - visible on public register |
| Settled account (after DMP) | Positive impact once recorded | Improves your file over time |
Why might a creditor add a default even though I am making payments?
A DMP reduces your payments below the contracted amount, which technically means you are in breach of your credit agreement. Creditors are entitled to add a default to your file as a result, even if you are paying something each month and even if they have agreed to the arrangement.
In practice, many creditors will not add a CCJ if you are keeping up with DMP payments, because a CCJ requires court action and costs them money. StepChange notes that CCJs are relatively uncommon for DMP clients compared to defaults.
Will my credit score improve after my DMP finishes?
Yes, over time. Once your DMP is complete and your debts are settled, the negative markers on your credit file will remain for up to six years from when they were recorded - but they become less significant as time passes. Lenders typically place more weight on recent credit behaviour than older history.
You can begin actively rebuilding your score after your DMP ends by using a credit-builder credit card responsibly, registering on the electoral roll (if you have not already done so), and making sure all current bills are paid on time. Experian, Equifax and TransUnion each offer free credit report access, and monitoring your file regularly helps you spot errors.
Can creditors still take legal action while I am on a DMP?
Yes. Because a DMP is not legally binding, creditors retain the right to issue a County Court Judgement (CCJ) even if you are making payments through the plan. In practice this is uncommon for accounts that are receiving regular payments, but it can happen - particularly if a creditor has not agreed to the DMP terms or if payments fall behind.
If you are worried about legal action from a creditor, a free debt adviser at StepChange (0800 138 1111) or National Debtline (0808 808 4000) can advise on your options, including whether a formally binding arrangement such as an IVA might be more appropriate.
How does a DMP compare to other debt solutions for credit impact?
Every formal debt solution will affect your credit file. The question is whether the impact is worth the benefit of becoming debt-free.
| Solution | Credit file impact | Legally binding? | Debt written off? |
|---|---|---|---|
| DMP | Defaults and reduced payment markers | No | No |
| IVA | Default markers; listed on Insolvency Register | Yes | Yes (remainder at end) |
| Debt Relief Order (DRO) | Listed on Insolvency Register | Yes | Yes (after 12 months) |
| Bankruptcy | Listed on Insolvency Register | Yes | Yes (most debts) |
FAQ
How long will a DMP stay on my credit file?
There is no single DMP entry on your credit file. What remains are the individual markers each creditor has recorded - most commonly defaults, which stay for six years from the date they were added. These drop off automatically after six years, whether or not the debt has been paid.
Can I get credit while on a DMP?
Technically yes, but in practice most mainstream lenders will decline you while you have active defaults or arrangement markers on your file. During a DMP it is generally advisable to avoid taking on new credit, which will be part of the agreement with your DMP provider anyway.
Will my bank close my account if I enter a DMP?
It can happen, particularly if you owe money to the same bank that holds your current account. If your bank is one of your creditors, it is worth opening a basic bank account with a different provider before starting your DMP. Banks including Barclays, HSBC and NatWest all offer basic accounts that do not require a credit check.
Is a free DMP from a charity the same as one from a fee-charging company?
The debt management plan itself works the same way. The difference is what you pay for it. Free charities such as StepChange and PayPlan pass your entire monthly payment to your creditors. Commercial DMP companies deduct their fees first, which means less reaches your creditors each month and it takes longer to become debt-free.
Does a DMP affect my partner's credit score?
Not directly. Your credit files are separate unless you have joint financial products - such as a joint mortgage, loan or bank account. Joint products create a financial association on both files. If you share a joint account with your partner, their file will show you as a financial associate, which can affect how lenders assess them.