How Long Does a DMP Stay on Your Credit File? (2024)

A DMP (Debt Management Plan) is an informal debt solution, chosen by those who want to reduce their monthly debt repayments to one single outgoing. While it is an effective debt solution, it does mean that some negative information will still be listed on your credit report.

This is why it’s important you understand how long a DMP can stay on your credit report and potentially impact it.

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How long does a DMP stay on your credit file?

DMPs are not listed separately to your other credit products, on your credit report. This is because they are not registered anywhere official, where there is a central source of information. Instead, they may be added as markers to the credit products you are paying off, for lenders to see when they review you – such as when you apply for something like a loan or credit card.So they will stay on your credit file for as long as it takes you to complete them.

The accounts you are repaying your DMP through will already be listed on your credit report, and once the DMP is complete the marker will be removed and the accounts themselves will be marked as closed – they will then remain listed for six years from the settled date. If they are still open, they will be classed as being paid on time and in full.

Will a DMP affect my ability to get credit?

If you have debts that you are struggling to repay, it is likely that your credit rating is not good, even before you enter into a DMP. However, having a DMP flagged on your credit file does also suggest to lenders that you are a further risk and are paying a reduced amount on the debts that you owe. This means it can be harder to get credit.

A DMP is not a legally binding agreement, so it won’t help if the creditors you are dealing with decide to issue a default against you or increase the fees on later repayments – which can potentially see you get into more financial trouble.

This is why if you have significant debts, which you are struggling to repay, we often suggest taking on another solution instead – such as an IVA (Individual Voluntary Arrangement), which freezes interest and charges and still allows you to benefit from a simple, single monthly repayment. You can read more about Individual Voluntary Arrangements on the site or speak to our team.

What credit can I get while on a DMP?

While we don’t advise taking on more credit while paying debt via a DMP, we understand that sometimes it is necessary. For example, if you need car insurance or a mobile phone contract – as these are both things that are credit checked.

It’s unlikely you will be rejected for car insurance, this is because providers know that you can simply cancel anytime and so will offer an agreement but perhaps at a higher interest rate – so expect to pay more monthly.

When it comes to mobile phone contracts, you will be credit checked by the company you are applying through. To improve your chances of being accepted we recommend opting for a low monthly cost, the less credit you need the likelier it is you may be accepted. So don’t go for the biggest flashiest phone available!

You will also still need to pay utility bills. Utility providers will credit check you, mainly if you opt to change from pre-payment to paying monthly or quarterly, so bear this in mind.

Can I still rent or have a mortgage while on a DMP?

Finding a new home can feel difficult when you are paying your debts through a DMP, whether you are looking to rent or buy. Here we break down how it can affect you:

Renting a property with a DMP

Some landlords and letting agents will ask for your permission to perform a credit check on you, when you apply for a rented property, where they will be able to see any defaulted accounts you may have and that you are repaying your debts via a DMP. This may make them less inclined to accept you as a tenant because they will not feel confident that you can pay your rent and bills in full.

However, not all landlords or lettings agents perform credit checks so there is still a chance that you can find a lovely new home, even with a DMP on your credit report!

Getting a mortgage with a DMP

Getting a mortgage at a good rate can feel tough at the best of times, but with outstanding debts on your credit report your chances are reduced even more. However, some lenders specialise in offering mortgages to people with low credit so it is possible – but you should expect to pay a much higher interest rate.

If you have to take on a DMP though to repay your debts at a lower amount, then it’s unlikely you will also be able to offer a big enough deposit for the mortgage you want.

Remortgaging with a DMP

When your mortgage deal expires, you may want to remortgage to get a better deal but with a DMP and a low credit score you will find it hard to get a good rate. However, if you are unable to remortgage it’s likely that your mortgage provider will just move you onto their standard rate and you can continue paying.

We recommend if you are looking to get a new mortgage or remortgage with a DMP that you work with a qualified mortgage broker – although bear in mind that they will charge a fee for their services – or seek free mortgage advice from a financial expert before you apply for one.

What are the benefits of taking on a DMP?

There are actually many positives that a DMP can offer, when you are trying to remove problem debt. These include:

  • Dealing with only one monthly repayment – making the admin around your debt easier.
  • Creditors may sometimes freeze charges or interest – this isn’t guaranteed, but has been known to happen.
  • The arrangement is informal – this means you can cancel anytime and don’t need to worry about formal insolvency procedures going against you.
  • At the end of a DMP, you will be debt free – a DMP will continue until the debts are cleared.
  • You don’t have to deal with your creditors – a DMP provider, like PayPlan, will deal with them on your behalf.

Should I take on a DMP?

This all depends on your current situation, as well as how much you owe. But a DMP may be a good option for those who:

  • Can afford to pay their priority debts (such as mortgages and council tax) and general living costs.
  • Don’t want to deal with your creditors anymore.
  • Want to remove the stress that comes with dealing with multiple debt repayments.

What happens when my DMP is finished?

The debts associated with your DMP may still stay listed on your credit report until the six-year period is up from when they were added – if they have defaulted or there are CCJs associated with them, for example – but the marker for your DMP will be removed.

This may help if you apply for credit but it’s unlikely that your score will dramatically improve simply because the DMP is removed. This is when you will need to think about rebuilding your credit score, which takes time and patience but it can definitely be done! We have a full guide on how to rebuild your credit here on the site, which can help when you reach the end of your DMP and your debts are paid.

How do I set up a DMP?

If you feel that a DMP is the right choice for you, then here’s how to go about setting one up:

  • Take some time to prioritise sorting your priority debts – this means ensuring payments for things like your mortgage and utility bills are covered first.
  • Check your monthly income and outgoings against your budget to see what you have leftover – this will be what you can afford for a monthly payment.
  • Take some time to speak to DMP providers to find one that suits you and your needs – our team here at PayPlan are experts on DMPs and can offer any initial advice you may need when deciding to set up this debt solution.
  • Choose your DMP provider and work with them to decide on the agreement.
  • When you receive confirmation of your agreement and your contract, check it over carefully before proceeding. Ask questions and ensure you know exactly what everything means.
  • Ensure your repayments are made on time and in full until the debt is cleared!

If you are considering taking on a DMP, then we have lots of information readily available or our expert team are on hand to offer advice six days a week via phone or live chat. Get in touch today and take that first step to becoming totally debt free and truly living again.

More Information on Debt Management

  • Get out of debt with an IVA
  • Our debt solutions
  • Compare debt management companies
  • Questions about debt management
  • How much can I save with PayPlan?
How Long Does a DMP Stay on Your Credit File? (2024)

FAQs

How Long Does a DMP Stay on Your Credit File? ›

The accounts you are repaying your DMP through will already be listed on your credit report, and once the DMP is complete the marker will be removed and the accounts themselves will be marked as closed – they will then remain listed for six years from the settled date.

How long does DMP stay on your credit report? ›

How long does a DMP stay on your credit file? Debts will stay on your report for six years, starting from the date they're paid off or defaulted. A DMP means you'll repay your debts more slowly, so your score may be negatively impacted for longer.

What happens to my DMP after 6 years? ›

After 6 years, the negative information recorded on your credit file will start to disappear. However, this doesn't mean you're automatically debt-free or that your credit score will immediately improve. It's important to continue making your DMP payments and practicing good financial management.

How long does a debt relief program hurt your credit? ›

Debt relief can be a lifeline to help you get out from under unaffordable debt—but it can also damage your credit. So, if you're considering a form of debt relief, you'll want to bear in mind its effect on your credit report, where the information can stay for up to 10 years.

Can a DMP be written off? ›

A debt management plan (DMP) isn't legally binding, so you can cancel it if you feel it isn't working for you. However, you may not get a refund of your fees and you'll need to make sure you have another way of dealing with your debts.

How long does DMP stay in your system? ›

The accounts you are repaying your DMP through will already be listed on your credit report, and once the DMP is complete the marker will be removed and the accounts themselves will be marked as closed – they will then remain listed for six years from the settled date.

Does debt forgiveness ruin your credit? ›

Debt forgiveness may negatively affect credit scores, making it challenging to obtain future loans or credit. Forgiven debt of more than $600 may be considered taxable income, potentially resulting in a hefty tax bill.

Is it better to settle debt or pay in full? ›

Summary: Ultimately, it's better to pay off a debt in full than settle. This will look better on your credit report and help you avoid a lawsuit. If you can't afford to pay off your debt fully, debt settlement is still a good option.

What debt relief doesn t ruin your credit score? ›

These methods won't crush your credit score: Consolidation loans from a bank, credit union, or online debt consolidation lender. Balance transfer(s) to a new low- or zero-rate credit card. Borrowing from a qualified retirement account, such as an IRA or 401(k).

Can I get credit if I have a DMP? ›

Even if you're in a DMP, your creditors may still record that you've missed payments, as you'll be paying less than you agreed to when you took out the original credit agreement. This will mean you could find it harder to get credit while you're making reduced payments and for some time afterwards.

What is the maximum debt for DMP? ›

There isn't a fixed maximum debt level for a DMP. What's more important is whether the plan can help the debtor manage and clear their debts in a reasonable amount of time. If someone has a very high level of debt, there is a chance that either the monthly payments or the duration of the DMP would be unrealistic.

Do most creditors accept DMP? ›

Sometimes a creditor will refuse to deal with a DMP provider. This could be because the creditor doesn't want to accept the reduced payments or sometimes it could be because they've objected to you using a fee-charging provider, which would mean there's less money to pay the debts you have with them.

What happens if I don't pay my DMP? ›

Missing a payment will mean your creditors don't get the monthly payment they're expecting, which may mean they decide to stop co-operating with your DMP. Don't bury your head in the sand, as this will only make the problem worse. Talking to your provider quickly is the only way to get the problem sorted out.

Does a DMP hurt your credit? ›

The notation signifying your DMP activity does not have a negative effect on your score going forward – in fact, it may suggest to lenders that you actively work to pay all of your debts to the best of your ability.

Does debt come off your credit report after 7 years? ›

In general, most debt will fall off of your credit report after seven years, but some types of debt can stay for up to 10 years or even indefinitely. Certain types of debt or derogatory marks, such as tax liens and paid medical debt collections, will not typically show up on your credit report.

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