How Long Does a Debt Management Plan Stay on Your Credit?

A debt management plan is one way to pay off your creditors and get out of debt, but can it hurt your credit score? It’s possible, but how and for how long is a little complicated. Here’s what you need to know about a DMP (Debt Management Plan) and what impact it has on your credit.

How a DMP is reported on your credit

First of all, a DMP is not listed as a separate account on your credit report. Your current creditors may flag your account to show that your payments are being made through a DMP. This will only happen if and when they accept the revised payment terms of the DMP. They may also add a status statement to your account showing the terms of your DMP. If a potential creditor views your full report, they’ll see this statement and they’ll know that you did not pay the account as originally agreed. It’s important to note, however, that having your accounts noted as being paid through a debt management plan almost never has any impact on your actual score. Most major scoring agencies, such as FICO, don’t factor this into their scoring models.

Normal credit rules still apply

Although the DMP itself won’t impact your credit score, there are potential side effects of using this option that may cause your score to drop (if only briefly).

Don’t miss payments

If you’re working with a third-party company to arrange your DMP, it’s important that you continue to make payments on your accounts until the company takes over your payments. Otherwise, you run the risk of missing payments which will almost certainly have a negative impact on your score. But as long as your payments are made on time and meet the requirements of the DMP they agree to, your credit score should be positively impacted by your ongoing payments.

Closing accounts can lower your score

It’s important to keep in mind that accounts are usually closed when they are included on a debt management plan. One factor in your credit score is often the age of your accounts. Credit accounts that have been open for a long period of time reflect more positively than accounts that are recently opened. So if you include a number of older accounts on a DMP, your score is likely to drop in the short term as the average age of your accounts drops. If your credit is already poor, this probably isn’t a big concern.

The negative impact it could have on your report is minimal when compared to your long-term positive impact of paying off your debt. On average, DMP clients have seen their credit score improve by 62 points after two years.

So how long does a DMP stay on your credit?

Technically, a debt management plan is never on your credit report. Accounts paid through a DMP may be marked as such, in which case that designation should disappear once the account is pain in full.

If payments are missed during a DMP, and your accounts become delinquent, those negative marks will remain for seven years (as any would missed credit or loan payment). Fortunately, the impact of missed payments lessens over time and your credit should recover quickly, presuming you resume making on time payments.

  • Better Business Bureau A+ rating Better Business Bureau
    MMI is proud to have achieved an A+ rating from the Better Business Bureau (BBB), a nonprofit organization focused on promoting and improving marketplace trust. The BBB investigates charges of fraud against both consumers and businesses, sets standards for truthfulness in advertising, and evaluates the trustworthiness of businesses and charities, providing a score from A+ (highest) to F (lowest).
  • Financial Counseling Association of America Financial Counseling Association of America
    MMI is a proud member of the Financial Counseling Association of America (FCAA), a national association representing financial counseling companies that provide consumer credit counseling, housing counseling, student loan counseling, bankruptcy counseling, debt management, and various financial education services.
  • Trustpilot Trustpilot
    MMI is rated as “Excellent” (4.9/5) by reviewers on Trustpilot, a global, online consumer review platform dedicated to openness and transparency. Since 2007, Trustpilot has received over 116 million customer reviews for nearly 500,000 different websites and businesses. See what others are saying about the work we do.
  • Department of Housing and Urban Development - Equal Housing Opportunity Department of Housing and Urban Development
    MMI is certified by the U.S. Department of Housing and Urban Development (HUD) to provide consumer housing counseling. The mission of HUD is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD provides support services directly and through approved, local agencies like MMI.
  • Council on Accreditation Council On Accreditation
    MMI is proudly accredited by the Council on Accreditation (COA), an international, independent, nonprofit, human service accrediting organization. COA’s thorough, peer-reviewed accreditation process is designed to ensure that organizations like MMI are providing the highest standard of service and support for clients and employees alike.
  • National Foundation for Credit Counseling National Foundation for Credit Counseling
    MMI is a longstanding member of the National Foundation for Credit Counseling® (NFCC®), the nation’s largest nonprofit financial counseling organization. Founded in 1951, the NFCC’s mission is to promote financially responsible behavior and help member organizations like MMI deliver the highest-quality financial education and counseling services.