Sunday, 11 November 2012

The Affect of Debt Management Plan (DMP) on Credit Score


If you have settled you debts through debt management plan agreement and miss any payments you have to make to your creditors, then your credit rating will be affected very badly. And if you will pay less to your creditors each month than you originally agreed then they will view your account as in default and issue you with a default notice. Your creditors will put down that you have missed the payment on your credit file and will issue a notice to you. That’s why your credit score is badly affected.

How Long a Debt Management Plan Affect Your Credit Rating:
If you start your debt management plan for the first time then it is likely that your creditors will issue a default notice against you. It will be registered in your credit file and will remain there for 6 years. Meanwhile all late payment records and default notice will be seen if anyone carries out a credit check against you and they will hesitate to lend you more money.
After six years if you are unable to pay your outstanding debts than you may still find that your credit rating remains bad and still face problems to borrow more money. If all of your outstanding debts have been settled or paid in full than your credit rating will begin to repair and your credit history will start improving.

Would My Credit Rating be affected anyway?
If you are facing problem with your debts and are unable to pay your creditors, your credit rating will be affected whether you go for debt management plan or others. Getting a bad or poor credit rating will not be due to debt management plan. Once your plan is completed whether it would be a DMP or any other and you have paid all your debt, then your credit score will start improving.

Improving Your Credit Rating:
If you think that your credit ratings is not good in financial market and have confused what and how should I do, you should take advice by an expert debt advisor. However you should pay to creditors on time, reduce debt to credit ratio, use more than one time of credit, and stick with the accounts you have.