Are utilities, insurance or phone contracts affected by a TPP?
Utility bills: Some utility companies may want to perform 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.
Car insurance: You have to undergo a credit check if you choose to pay your car insurance by monthly instalments using a credit agreement. However, because car insurance can be cancelled if you don’t keep up with the payments, you’re less likely to be refused.
Mobile phone contracts: Negative information on your credit history could make it harder to take out a mobile phone contract. Cheaper handsets with lower monthly costs may be easier to get, but this isn’t guaranteed.
Can I take out credit while I’m on a TPP?
You shouldn’t take out any further credit during your TPP. You’re not in a position to make the minimum payments on the debts you already have, so taking out more credit may make your situation more difficult.
If you have an emergency or unexpected expense, you may feel you need to borrow money. If this happens, we recommend you speak to your TPP provider. They can take a look at your budget and see if there are any resources available such as emergency grants.
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
Can my TPP affect the people that I live with?
Your credit file is yours alone. It won’t affect the people you live with unless you share a financial product, such as a joint loan, mortgage or household bills in joint names.
When two people are linked by credit, it’s called a ’financial association'. This means your record of making reduced payments may affect the other person’s ability to get credit.
Can I improve my credit score once my debt’s paid off?
Once your debts are repaid, your credit file will begin to steadily improve. All negative information such as missed payments or court action will ‘drop off’ your credit file after six years, even if the debt’s not fully repaid.
If you receive a lump sum of money, you may be able to negotiate full and final settlement figures on your debts with your creditors. We recommend you get advice from a settlements team first, as they can talk you through the process.
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.