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.