How does a DMP affect your credit rating?

If you start a Debt Management Plan (DMP), you will stop making your normal monthly payments to your creditors. This means that your accounts will go into arrears or further into arrears.

As a result of this your creditors are likely to record missed payments on your credit file and also issue you with a default notice which will also be recorded. These things will have a negative effect on your credit rating and make it more difficult for you to borrow money in the future.

Your credit rating will not start to improve until you have paid your debts in full or settled them with lump sum payments.

Remember if you are insolvent and considering a DMP, your credit rating is likely to become worse whether you start the solution or not. If you are in a position where you cannot pay your debts you are likely to start missing payments to your creditors even if you do not start a DMP. As a result your credit rating will be negatively affected anyway.

If you start a DMP or any other debt management solution you have the opportunity to get your debts under control and work towards getting a better credit rating in the future.

Additional Information

Only a brief overview of how a Debt Management Plan might affect your credit rating is given here. More information can be found here: Debt Solutions & Credit Rating

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