If you’re in a Debt Management Plan (DMP) or thinking about going into a DMP then it is important to understand how this will affect your credit file.

A DMP is an arrangement that can be made between you and your creditors which allows you to pay a smaller amount back each month than originally agreed.

PayPlan offer free Debt Management Plans and we act as an intermediary between you and your creditors. Rather than paying each creditor individually every month, PayPlan take one monthly payment from you which is then distributed between your creditors accordingly. PayPlan is a non-fee charging debt management company which means we don’t charge any fees for setting up or managing DMPs so 100% of your monthly payments go towards paying off your debt.

There are certain debts that can’t be included in a Debt Management Plan, which are known as ‘priority’ debts. These include mortgages, overdue payments for utilities, magistrates’ court fines, TV license fees or overdue income tax or VAT.


What will a DMP look like on my credit file?

A DMP won’t be recorded on your credit report as a separate entry like it would for insolvency options such as an IVA or court judgements.

It is more than likely that the reason you have entered into a DMP is because you have a range of accounts that are in arrears or have even defaulted. Each of your creditors that are included in your DMP will be ‘flagged’ on your credit file (which is added by the lender). This ‘flagging’ allows for other lenders who may be checking your file to know that you’re in an arrangement to repay your debts.

How long will a DMP stay on my credit file?

As DMP’s aren’t specifically recorded on your credit file and instead ‘flags’ are placed on the creditors which you are making reduced payments to, this means that any court actions such as CCJs, defaults or missed payments will be removed six years from the date that it happened.

This may mean that you haven’t fully repaid your debts yet but they are still removed from your credit file. It is worth noting that credit files are updated once a month, so it may not show up straight away.

Can I get more credit when I’m in a DMP?

If you are thinking of getting out more credit then check the terms of your DMP as it may be that you aren’t allowed to borrow more money until you complete the plan. It is possible to get more credit when you’re in a Debt Management Plan, although it is likely that the amount of money you can borrow will be restricted and it will also have high interest rates associated with it. If you can and choose to borrow credit, then always ensure you can afford the repayments to avoid making your financial situation worse.

I’ve finished my DMP – how do I improve my score?

You can improve your credit score by taking a few simple steps:
  • Ensure you’re registered on the electoral roll
  • Consistently make your payments on time each month
  • Check your details are all correct on your credit file
  • If you are financially linked to someone but no longer have joint accounts, then apply for a financial disassociation.

If you have any other questions, please ask us in the comments below or speak to us on Facebook or Twitter. If you’re struggling with money, then get in touch with one of our trained advisers at PayPlan today on 0800 716 239 or visit www.payplan.com.