DMPs and rental agreements
If you’re already renting it’s unlikely your current landlord would be told about your debt management plan. Rent is a ‘priority payment’ so you would be advised to pay this in full, outside your DMP, and come to an arrangement to pay any rent arrears you might have at an affordable rate.
Starting a new tenancy while you’re on a DMP may be more difficult because some landlords will want to check your credit file.
They may be less willing to accept you as a tenant if you have negative information such as missed payments or defaults on your credit file.
Landlords can only access your credit file with your permission, and you’ll be asked to sign a form giving your consent first.
Not all landlords perform credit checks. Social landlords, such as local authorities and housing associations, are less likely to look at your credit history.
Smaller private landlords and letting agents won’t always use information from credit reference agencies. Some will only check public records. They don’t need your permission to do this, but the information they can find will only tell them if you have a recent history of court action or insolvency. It won’t tell them about defaults or missed payments.
Some private landlords or letting agents may still be willing to accept you as a tenant even if you have a poor credit history. However, they may ask you to provide a guarantor with a good credit rating, or a pay a larger deposit or rent in advance.
DMPs and mortgages
Taking out a new mortgage
If you don’t currently own a property it will be more difficult to get a new mortgage while on a DMP. The outstanding debts you have will be considered as a negative factor in a mortgage application and information registered on your credit file about your debts could count against you.
Another significant barrier will be not having a lump sum of money available to put down as a deposit.
It may be harder to remortgage when on a DMP, but there may be some options available, depending on how long you’ve been on the plan for. If your mortgage deal expires then your current mortgage lender will usually offer their ’standard variable rate‘. This isn’t likely to be the best deal on the market, but it’ll mean your mortgage can continue with your current provider.
Whether you’ll be able to obtain a new mortgage deal will depend on a variety of factors:
- The amount of negative information recorded on your credit file
- How much equity you have in your property, and
- Your current income
We strongly recommend getting qualified mortgage advice if you need help remortgaging while you’re on a DMP. It’s also worth finding out how a DMP may affect your mortgage, rent or tenancy, even if you’re up to date with the payments.
Car insurance and DMPs
Paying for car insurance by monthly instalments may involve a credit check because you’ll be signing a new credit agreement. Because car insurance can be cancelled if you don’t keep up with the payments, lenders offering these credit agreements are less likely to refuse you than other types of debt
While it’s not guaranteed you’ll pass a credit check while you’re on a DMP, very few of our clients have problems getting car insurance. However, you may be charged a higher rate of interest because of your credit history, so your monthly payments could be higher.
Find out more about interest and charges.
Mobile phone contracts
If you’re on a DMP it’s a good idea to keep your mobile phone costs as low as possible. New mobile phone contracts will usually involve a credit check and there’s a chance you’ll be rejected if you’re applying for a contract that includes an expensive phone and high monthly cost. If you’re looking at cheaper handsets with lower costs you may have a better chance of being approved.
Not sure if you can afford your current mobile phone contract?
Some utility companies may run a credit check. 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.
Find out how to get help with and save money on utility bills.
Can I get credit while I’m on a debt management plan?
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 plan 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 plan 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 making reduced payments impacts your credit file, you may be charged a higher interest rate or refused credit altogether.
Can my DMP affect the people that I live with?
Your DMP will only affect people who you have joint financial products or joint debts with. This would be something like a loan, bank account or household bills that are in joint names.
In this case 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.