How will a Debt Arrangement Scheme affect my credit rating?

How does a debt arrangement scheme affect your credit rating?

Once you start a Debt Arrangement Scheme (DAS) your credit rating will become worse. The reason for this is that you will pay less to your creditors each month than you originally agreed.

This will cause them to start adding records of reduced or missed payments against your credit file whether or not they agree to your proposed payments. In addition it is likely that your creditors will issue you with a default notices.

The combination of late payment records and default notices on your credit file will make your credit rating poor and prevent you from getting additional credit from most main stream lenders.

How long will your credit rating be affected by a DAS?

Generally your credit rating will remain poor until you DAS is completed. I.e. You have either settled your debts or paid them in full.

Any default notices which your creditors issue against you will remain recorded on your credit file for 6 years. During this time, all late payment records and default notices will show up if anyone carries out a credit check against you. This is very likely to stop them from lending you more money.

Will my credit rating be affected anyway?

If you are struggling with debt and you are no longer able to pay your creditors, your credit rating will be affected whether you start a DAS payment plan or not.

As such, if you are in a position where you are unable to afford to pay your creditors and cannot help but miss your normal payments to them, worrying about your credit rating should not be the primary factor to consider when deciding whether to start a Debt Arrangement Scheme.

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