Utility bills - Some utility companies may credit check you. For example, this might happen if you apply to change from a pre-payment (‘pay as you go’) meter to a credit meter where you can pay monthly or quarterly.
Can I get credit while I’m on a DMP?
You shouldn’t take out any further credit while you’re trying to repay your existing debts through a DMP. Doing so could be a “breach” of your DMP agreement, as you’re not in a position to make the minimum payments on the debts you already have.
Your budget should account for all the regular costs that are likely to crop up while on a DMP, so hopefully there’ll be no need to borrow money to cover these.
If you have an unexpected high expense, you may feel you need to borrow money. We recommend you speak to your DMP provider before taking on any more debt, so they can check if there are any realistic alternatives, for example reducing your DMP payments or applying for a grant to help you.
If you do need to take out a new credit agreement the lender will run a credit check, and because of the impact on your credit file of making reduced payments, you may be charged a higher interest rate or refused credit altogether.
If you're on a DMP don’t consider a consolidation loan to try and pay your debts off earlier. We don't recommend this type of borrowing while you’re on a debt solution.
Can my DMP affect the people that I live with?
Your credit history is likely to be affected by being on a DMP. However, it‘ll not affect the people that you live with unless you have joint financial products or joint debts. This would be something like a loan, bank account or household bills that are in joint names.
If this happens there’ll be a ’financial association' linking your credit files. This means your record of making reduced payments may affect the other person’s credit file and their ability to get credit.
Starting to improve your credit score while you're on a DMP
Your credit history will start to look a lot better once your DMP has been completed. All negative information such as details of missed payments or court action will be removed after six years, even if the debt’s not fully repaid. Additionally, if an account has defaulted, the debt will be removed entirely from your credit file six years after the default even if it’s not fully repaid.
While you're making payments to your DMP, there may still be some negative information about your debts but anyone checking your credit file will see that despite your previous difficulties, you’re on your way to becoming debt free.
There are several steps you can take during your DMP, and continue once it's complete, to improve your credit score, such as:
- Regularly check your credit report. By doing this you’re able to correct any misinformation or inaccuracies as soon as they appear.
- Being registered on the electoral role. This will help future lenders verify your personal information is correct.
- Paying your bills on time. Depending on how you pay for them, bills such as your gas, electric and mobile phone contract will appear on your report.
- Taking out new credit. Just be sure to spend small amounts that you can repay in full every month.
For more information on repairing your credit file including alternatives to taking out new credit, we’ve written an article about how to improve your credit file after a debt solution on our MoneyAware site.
How do I check my credit file?
A number of credit reference agencies offer a free one-month trial where you can access your credit score. Further information can be found on the government website.