How will the DAS affect my Credit Score?

The Debt Arrangement Scheme (DAS) will damage your credit reference score.

This is because when you enter the DAS, your name is added to a public register and this information is shared with Credit Reference Agencies.

In addition to this, as you are no longer making your contractual payments, you will go into arrears and this will be recorded on your credit reference file.

DAS, however,  is intended for people who cannot manage their monthly payments each month and, therefore, will likely have damaged credit scores already.

They may even have had Notice of Arrears or Default Notices served on them.

How else can the Debt Arrangement Scheme affect my ability to obtain credit?

The DAS can affect your ability to obtain credit in other ways too.

As mentioned above, once you go into the Scheme your name is added to a public register and lenders can check if you are on it before they lend to you.

Also, when you are in the Debt Arrangement Scheme, you are obliged to inform creditors if you borrow more than £2,000.  Or where you have already borrowed £1,000, when you try and borrow any amount.

Can my Credit Score improve whilst I am in the Debt Arrangement Scheme?

Your Credit Score can improve whilst your in the Debt Arrangement Scheme.

Your accounts will, however, still show as being in arrears throughout your Programme until they are paid off.  After they are paid off they will show as being as settled. This means your debts have been paid off in full.

However, six years after your accounts go into default, they will disappear off your Credit Reference Files.

Your Credit Score may, therefore, improve during your Debt Payment Programme where it lasts longer than six years.

When will my account go into default on my credit file?

When accounts go into default it is for lenders to notify the credit reference agencies.

Some firms may report your account in default after three months of missed payments, whilst others may wait six months. It depends on their own rules. Some may also serve a formal Default Notice under the Consumer Credit Act 1974.

It may be possible to argue with your lender that the default date should be backdated to the date that your Debt Payment Programme was approved, as arguably at that point you formally indicated you were no longer able to meet your obligations under your agreement.  This argument may be stronger where the creditor agreed to the Debt Payment Programme.

If possible, this would mean any record of your Debt Payment Programme, or the accounts you defaulted on, should disappear off your credit reference file six years after you enter into the Debt Payment Programme.