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 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.
Improving my credit score once a DMP has repaid my debt
Your credit history will start to look a lot better once you’ve repaid your debts. 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 now debt free.
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. And 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.
We’ve written an article about how to improve your credit file after a DMP on our blog.
You may be considering settling your debts earlier than you’re expected to at the moment. If you receive a lump sum of money, your creditors may negotiate full and final settlement figures on your debts with you. Whether settling your debts is your best option is based on several factors, and we recommend you get advice from a settlements team first.
How do I check my credit file?
There are three main credit reference agencies in the UK and each will allow you to access the credit history they hold on you. You can access your credit report online by going to the websites for any of these organisations.
All three will supply you with a copy of your credit file for a fee of £2, but you may be able to get it free.
- Equifax will allow you to access your credit report for free, but only as a trial when signing up to their paid service.
- Experian has a ‘free forever’ service that lets you check your credit file without paying a fee.
- Call Credit has a service called Noddle which will allow you to access your credit history for free without time limits.
Please bear in mind that some creditors may update your credit file with one agency but not the others. For this reason, it’s always a good idea to check your credit score with all three agencies, not just one.