So a Debt Management Plan or a DMP
doesn’t show on your credit report as a single entry – like it would for
insolvencies or a court judgment however many of the debts that are included in a
debt management plan will show on your credit report and should be updated as
they’re repaid. Each of the accounts will have a special flag that’s put there by the lender to say that the account is part of the debt management plan and
that lets other lenders know when they’re looking at your credit report
that that account is part of your DMP. After you complete your DMP it’s likely
most of your accounts will either return to normal or be closed. If they are closed then they’ll be removed from the credit report six years from the day
that they’re closed. If your account was a default and that
was included in your DMP then that will be removed six years from the start date
of the default because we only keep them for six years on the credit report. Having accounts with arrears or defaults
is likely to leave you with a very low credit score. It’s likely at that point
that further borrowing is probably not the most sensible option. Once your DMP ends you should find that your score improves. If you are looking to borrow
further credit in the future and you find that your credit report still has a
negative repayment history on there, then you’ll find that eligibility checkers
are a good way to shop around and to look for credit to see what you’re most
likely to get before you actually make an application, which could damage your
credit score. If you are considering a DMP then it’s important to seek
appropriate advice and help at the earliest opportunity so that you can
start to understand the implications of entering a debt management plan and how
that might affect your credit report. It’s possible to get credit when you’re
in a debt management plan or you do have a low credit score, however your options are usually
limited to high interest rates or low limits. The terms of your DMP might mean
that you can’t borrow during your debt management plan. However
if you are allowed to borrow and you do want to apply for credit it’s always
important to make sure that you can afford the repayments on that credit. You might also struggle to get a mortgage if you’re on a debt management
plan and if you are already a homeowner you might be thinking about using
remortgaging in order to pay off your debt however you will still struggle if
you have a low credit score. So think about using quotations, and speak to your lender and explain
the circumstances, or use a specialist broker.