Credit Score Basics > What does AR mean on my credit report?

What does AR mean on my credit report?

Wollit Team2 minute read · Updated 23rd September 2024

If you’ve looked at your credit report in the UK, you may have seen the term "AR." This stands for "Arrangement to Pay." Here is what it means,, how it affects your credit report, and what you can do if you see this on your file.

What is an Arrangement to Pay (AR)?

An Arrangement to Pay means that you have made a deal with a creditor to pay off a debt in a different way. This usually happens when you are having trouble keeping up with regular payments.

Sometimes, an AR can also be part of a Debt Management Plan (DMP), where a third party helps you manage your debts and negotiate with creditors on your behalf.

Why does AR appear on my credit report?

The AR status shows up on your credit report to let potential lenders know about your financial situation. It tells them that while you are a responsible borrower and are trying to manage your debts, you might not be able to repay future loans.

How does AR affect my credit score?

Having an AR status on your credit report can lower your credit score. An AR can decrease your score because it shows that you've had trouble making payments before. Lenders may see this as a risk, as you can imagine.

Also, an AR will stay on your credit report for six years. The good news is that as time passes its impact will be less important. Also, if you repay the debt, the lenders will get a bit more confidence in you too.

Can I remove an AR from my credit report?

It really depends. Sometimes, creditors may agree to remove the AR status if you settle the debt or complete the payment plan successfully.

Also, if you think there’s a mistake regarding the AR status on your credit report, you can dispute it with the credit reference agency. They will look into it and correct it if necessary. One thing to keep in mind here: the credit agencies can’t actually remove the AR without the lender’s approval. So you still need to talk to the lender that placed the AR on your file, even if it’s a mistake.

What should I do if I have AR on my credit file?

If you find yourself with an AR status on your credit report, here is what you need to do:

• Work out a payment plan that fits within your budget. Talk openly with creditors about what you can actually afford.
• Consider speaking with a financial advisor or debt counsellor who can help guide you through managing debts and improving your financial situation. Nonprofits like StepChange can be incredibly helpful as well.
• Keep checking your credit report regularly for updates and changes. Make sure what’s in there is accurate and correct.
• Finally, keep working on showing lenders that, despite this AR, you are a responsible borrower. Pay bills on time, cut down on expenses, and avoid taking on more debt than you need.

At the end of the day, though, what lenders care most about is your credit history.

Luckily, now there are many apps that can help you build and improve credit.

One such app is Wollit. Wollit is an app that reports your monthly subscription as loan repayment, helping you build a history of timely repayments without the risk of getting hit with high-interest charges or going over your card limit. It can even report your monthly rent payment to Experian, adding another line in your credit report that shows lenders you're responsible and pay your bills on time.

Eventually, this should prove to the lenders that you’re committed to improving how you manage debts, and it should reduce the impact of a single AR in your overall credit file.

• Credit Report