How to repair your credit history after your Debt Management Plan

A Debt Management Plan can be a great way to pay off your unsecured debts in an affordable way. By the time you finish your Debt Management Plan, not only will you have paid off all the debts contained within it, but you’ll be a dab-hand at budgeting and careful spending within your means – in fact you’ll probably have a much healthier financial life.


One of the downsides of any debt solution however, is the negative effect on your credit history. In today’s article we’re going to explain what you need to do to improve your credit history once your DMP is over and you’ve cleared the debts in it.

How to repair your credit history

As a DMP customer, when your debt solution has finished you will usually have paid back the debts included in it in full. On your credit report they should show as ‘debt satisfied’. Any debts that you settled for less than the total owed may be marked as ‘settled’ instead. You should check your credit file to make sure your debts have been marked correctly and if they’re not you can contact the credit reference agencies about this. Remember you can now check your credit score for free, so you don’t need to worry about paying for this.

Your credit history shows your repayment history for six years – or 72 months. Every month a new month is added to it and the oldest month drops off. So past problems with repayments and defaults will drop off month by month over time.

One way of helping the process is to make sure that you are creating a positive payment record now. It’s vital that you pay any remaining credit agreements – such as pay-monthly car insurance, mobile phone contracts and some utility bills – on time each month as these will show on your history. If you rent your home, consider signing up for Credit Ladder. This is a great way to build your credit score by paying your rent on time each month – and its free.

There are a few basic housekeeping things that you should do to improve your credit score too:

• One of the first things you should do is make sure you’re on the electoral roll – that is registered to vote at your current address. Lenders use the electoral roll when they’re running their fraud checks on you and verifying your address if you apply to borrow money.

• You should also ensure that your passport and driving licence are both registered at your current address – and that all the credit reference agencies are showing your correct address (and previous addresses are correct too).

It quite likely that some high street lenders aren’t going to give you credit straight after you complete your DMP. But there are lenders that specialise in people with less than perfect credit histories. For example taking a credit builder credit card – and using it carefully, ensuring that you make your payment on time each month – can help you rebuild your credit history. You can then look at approaching more mainstream lenders.

It’s also important that you don’t fall into the trap of applying for a product or service too soon after your debt solution ends and that you’re applying for the right products for you. Each time you apply for credit and get rejected, it will leave a mark on your credit file, damaging it further. Keep a look out for lenders that allow you to do a “smart search” or “QuickCheck” that will tell you if you will be accepted without leaving a mark on your credit file.

Careful budgeting and making sure you are paying all your bills on time, is an important part of getting back on track financially once your solution is over. While it’s possible you might want to look into taking out more credit once your solution is over, it also makes sense to use the financial skills you’ve built up during your DMP to create a savings nest egg which means you’re less reliant on credit in future.

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