Credit Score Basics > Does StepChange affect credit rating?

Does StepChange affect credit rating?

Wollit Team2 minute read · Updated 18th September 2024

StepChange is a well-known charity in the UK that helps people deal with debt. Using StepChange for debt advice does not directly affect your credit rating. However, entering into a Debt Management Plan (DMP) or negotiating partial settlements can significantly impact your credit score and borrowing options in the future. Here’s how it works.

While a DMP shows that you are taking steps to manage your debts responsibly, it may also indicate past financial difficulties to lenders. Understanding these implications can help you make informed decisions about managing debt and improving your financial health over time.

What is StepChange and how does it work?

StepChange is a charity that offers free advice and support to people who are struggling with debt. Since it started in 1993, it has helped millions of people take control of their finances.

Here are some of the services it provides:

Help on how to manage your debts and improve your financial situation.
Debt Management Plans (DMPs): a plan that helps you pay off your debts over time with smaller monthly payments.
Bankruptcy advice.
And help with dealing with credit cards, loans, mortgages, and other debts.

Does using StepChange affect how lenders see me?

When you seek help from StepChange, the advice itself doesn’t directly affect your credit score.

However, the actions you take based on that advice can have a big impact. Here’s how:

If you enter a DMP through StepChange, this will show up on your credit report. While it shows that you are trying to manage your debts responsibly, it also tells lenders that you have had trouble paying in the past.
If you negotiate to pay less than what you owe as part of your DMP, this will appear on your credit report as "partially settled." This can also be a red flag for lenders because it shows that you didn’t pay back the full amount.
If you miss payments while in a DMP or if creditors report missed payments before starting the plan, these will hurt your credit score.

Some of these can be quite serious. A DMP and partially settled debts will stay on your credit report for six years from when it starts. During this time, it can really affect your ability to get new credit.

Still, you shouldn’t despair. If you’re really struggling with debt, working with StepChange is definitely the right first step. The next step should be rebuilding your credit.

At the end of the day, what lenders care most about is to see that you’re taking steps to improve your credit. Luckily, now there are many apps that can help you do this. 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.