Should I be worried about my credit rating while on a DMP?

posted by in Budgeting

Should I be worried about my credit rating while on a DMP?

Well, should I?

I’ve been giving debt advice for seven years and in that time I’ve talked with people from just about every walk of life who have fallen into difficulty with their finances.

Over the years I’ve spoken to many people who have felt like having a good credit rating is a sign that they’re a good person.

They therefore think that by damaging their credit rating this will somehow make them a bad person.

I’ve never subscribed to this viewpoint and I don’t think you should either.

Does a DMP affect my credit history?

First things first: a debt management plan (DMP) can be a great way to get back in control of your finances and reduce the payments on your debts to a manageable level (although this does mean that you’ll be repaying your debts for a longer period). Although they’re not obliged to, if your creditors are willing to co-operate then in most cases they’ll freeze their interest and charges too.

The DMP itself isn’t registered on your credit file but the record for debts included in it will have a flag added to them. This will indicate that the debt is being repaid through a DMP, so anyone checking your credit file can see you’re making reduced payments.

The bigger impact from being on a DMP is that you’ll be making reduced payments to each of your creditors. This could potentially lead to:

  • Missed payments being registered against your credit file – these stay there for at least 24 months and up to six years
  • Defaults being added to your account – these remain on your credit file for six years
  • County court judgments (CCJs) being registered on your account, also for six years

It’s almost certain that missed payments will be registered against you on a DMP. Defaults are very likely but that depends on your creditors and CCJs are less likely but can happen in situations where the creditor is unhappy with the payments they’re receiving.

We firmly believe that it’s most important to deal with your debts rather than having a good credit rating. It’s also worth mentioning that for most people their credit rating will already be on the slide before they start a DMP.

Can I improve my credit rating while I’m on a DMP?

I’ve been asked in the past whether it’s a good idea to try and improve your credit rating while on a DMP, to be more creditworthy once the DMP is complete. My honest opinion is that it’s not worth the bother. Once you’ve finished your DMP there are some steps you can take to improve your credit rating but if you’re still on a DMP then it won’t make a huge difference.

The best thing you can do to improve your credit rating while on a DMP is to try your best to get your debts paid off. The sooner you can do that then the sooner you’ll start to look like a more attractive prospect to future lenders. And a major benefit of being debt free is that you’ll feel better in yourself as well.

What is a credit rating anyway?

This article has talked about credit ratings quite a lot but we’ve not spent any time considering what a credit rating is. The truth is that there isn’t a universally accepted system to attribute whether companies can lend to you, just like there isn’t a blacklist of people who can’t borrow.

Lenders all make their own decisions based on the information they think is important. Credit reference agencies hold details about your financial accounts but it’s the lenders that crunch the numbers and decide if they want to lend to you or not.

My wife found herself in a situation which illustrates this point. A couple of years ago she applied for a mobile phone contract and was rejected but a couple of weeks later we were approved for a mortgage application.

So the information on your file can be interpreted differently from one company to the next; one company thought she couldn’t be trusted to repay a phone contract but the other was willing to offer her a mortgage!

Don’t sweat the small stuff

Having a debt problem is much more likely to be a symptom of bad luck rather than being a bad person. In our 2013 Personal Debt Statistics Yearbook we revealed the most common cause of a debt problem was redundancy or unemployment which could happen to anyone.

Your credit history only contains facts and figures about your financial accounts, and it would be a pretty terrible tool to find out whether someone is a decent person or not.

So instead of focusing your attention on a credit rating that doesn’t define who you are as a person, it’s better to concentrate on your most important concern: paying off your debts.

What do you think?

  • Do you think that having a good credit rating makes you a good person? Or vice versa?
  • Have you had any experiences of your credit rating stopping you from doing something?
  • Do you know have any good strategies to cope with a damaged credit file?

Share your thoughts below!


James Winterbottom has been a debt advisor for six years. Away from work he is an amateur app developer and writes fiction. James is a lifelong supporter of Huddersfield Town football club, which suggests he is either very loyal or very daft. He also likes to talk about himself in the third person in bio pages.

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  • lufcfan

    I’m on a DMP, but I’m coming towards the end of it (10 months or so). I’m now down to 5 debts (it was around 11/12 when I started the plan) – given that I’m now paying more than the minimum amounts on each account, and that it would be fairly easy to manage this small number of debts (with direct debits etc), would it not be worth me coming off my DMP so that I can pay off my debts at the same time as beginning to rebuild my credit score?

    • moneyaware

      Hi there,

      If you can afford the full payments then it may be possible to take over dealing with your debts without a DMP. I’d recommend giving us a call to chat through the best way to come off your DMP and how to approach your creditors.

      Kind regards


  • frank

    I work in I.T. not only does a bad credit rating stop me from working in certain areas (banking mainly) but so does being on a DMP, I was made redundant because I could not move to work on an I.T. system for a large Building Society, why? because I was on a DMP.

  • SDav

    Join the discussion…My DMP has been active for two years and will go on for about another five at my current rate of payment. I have noticed all if the defaults appearing on my credit report. The last of these will be off my credit report six years after my debts are repaid, so I am going to have a bad credit rating for the next 11 years! It is quite depressing because I am afraid I won’t be able to upsize my house and mortgage even after my dmp and debts are gone. Sometimes I think I might have been better off choosing a different debt option.

  • Craig Suv

    I requested a credit report and found that 4 of my 5 creditors had given me a Default which has complicated issues. Only the remaining 1 creditor has put a note stating that I am paying off the debt by means of a DMP so for anyone reading the report it looks bad despite me doing the right thing before things got too out of hand. I wouldn’t mind but these creditors contributed towards my situation by massively increasing interest rates on Visa cards when nobody could get loans, which I also tried to do to pay off my debts quicker and at a higher rate than present so the creditors shot themselves in the foot declining me! Moving forward I will increase the payment to this 1 considerate creditor whenever possible, the rest will get what they do at the moment. I tried to apply for an increased Mortgage while on my DMP, I got knocked back because only 1 default is permitted. They will honour the Mortgage as is stands which is in credit with no payments missed in 16 years but not look to increase it. SDav, not sure if it’s the same for all Mortgage providers but Yorkshire B.S. will allow an increased Mortgage 3 years after the debt is paid off despite the Defaults being on for 6 years.

    • SDav

      Join the discussion…only 8 years to go then! But of course then I will be 49 so there will be a new reason to reject me!

  • Katiana

    DMP / credit rating effects job applications. I am highly qualified but have been unable to move job as the type of work I am looking at will do financial checks. I openly tell people I am on a DMP as I want to take the shame out of it though some are very judgmental as if I lived the life of luxury before – when I was barely managing for years with accumulating credit cards and consolidating loans. I never had money from family to give me a start with anything and paid for all my own university education (via OU courses). I am not a bad person but I haven’t always managed my money in the best way possible (though I never missed a payment with any company). I live in a poor quality rented house that I moved into not long before I arranged my DMP. I don’t think I could move until my DMP is clear and possibly after that. The checks landlords now make are extensive in terms of credit checks etc and I am very fearful if I gave in my notice I could become homeless as another landlord would not have me – despite never ever missing payments for rent or utilities.

    On a positive note I should be debt free around August 2015. I can’t wait! I’ve not been debt free since I was 18 and given my first £2000 credit card.

  • Steve

    Do the defaults not drop off 6 years after they appeared on your file? I’m a year into a DMP that finishes at the end of 2018… the possibility of defaulted accounts staying on my file until 2024 is terrifying. I have no mortgage and no real assets, so would I be better off going bankrupt and starting again in 6 years if it’s going to take that long?

    • Steve

      Hi Rachel,

      That’s extremely reassuring – many thanks.

      I’m not looking to get into a position akin to this again, but I want to get on the property ladder sooner rather than later, so this is good news.

  • Jim

    If you’re on a DMP for a long time (say, 10 years), is it possible that the defaults could drop off your credit file before you complete the DMP?

    • moneyaware

      Hi Jim and thanks for your question.

      Yes, it is possible for the defaults to drop off before the end of your DMP. However there may still be other negative entries on your file.


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  • anna

    does my being on a DMP affect the credit rating of others at the same address?

  • Phil

    I couldn’t care less about my credit rating at the moment, I’m getting my debts paid off at a manageable rate each month and have no intention of buying anything on credit or trying to borrow money. It’s really good to know that my creditors have accepted reduced payments and I’m only paying about £120 per month instead of £400. I am working and we have our own house, so as long as we are careful everything should be ok.

  • Farhiya

    please help me with this.

    I sign student help line company for my daugter, They told me that it will be benefit for her and it was 3 years contract.After one year payment i made realised that i couldnt afford anyomore. i told them and they told me i have to pay regardless,I went to advice bureau and they wrote to them i cant afforded and i will pay £1 monthly. They put me default my account in 2007 and after 6years default was removed my account.One week later in 2013 they put me back again default.Ihave contacted Experian Credit expect and they contacted with them and my account was clear again. I havent checked my account afer one year and last week i login to my account and i found out that they renewed default my account.I again contacted Experian and they told me that i have to contact myself this company to sort it with them.I havent contact them morethen 7years now and how come they renewed.My understand is after 6years regardless payment or not default wil be removed?

    • moneyaware

      Hi Farhiya,

      Sorry to hear about the difficulties you’ve had dealing with this debt.

      The creditor should not be issuing more than one default for an account, as you can only default on a debt once.

      My suggestion would be to contact the company and make a formal complaint explaining what has happened and how you would like them to deal with it for you.

      If you’re not happy with the outcome of the complaint, there is also the Financial Ombudsman Service who help deal with disputes between you and creditors when you’re unhappy with how you’ve been treated. You can find out more about them at

      I hope you get everything sorted,

      Kind regards


      • Farhiya

        Hi Rory
        Thanks for your advice.
        I was talking to one of my friend who told me that if you were paying £1 until default being removed your account,soon you stop paying that they can renew default again,This worrying me. Can they do that?

      • moneyaware

        Hi Farhiya,

        No, creditors shouldn’t add a further default to an account that has already defaulted and been added to your credit file.

        Creditors are allowed to update your credit file with relevant information about the debt, such as your payment history and status of the account but they shouldn’t be adding a further default.

        I hope this helps,


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  • Victor Adair

    I just spent 7 years on a DAS ( Debt Arrangement Scheme and and paid all my debts off and now one of my banks put me on a default notice after the 7 years where up stopping me from getting any credit/mortgage now for 6 years! My advice to anyone thinking of paying back the debt would be to tell them to go stick it! If I had did this 8 years ago i would have had my record cleared by now and saved myself paying back every penny I had for 7 years. Makes me sick that trying to do the right thing doesnt work as they still screw you once you pay it all back.