How a DRO Could Affect Your Credit Score

A Debt Relief Order (DRO) will have a significant, negative impact on your credit score. This formal insolvency solution is recorded on your credit file, signaling financial difficulty to potential lenders.

1. Initial Record: Once approved, your DRO is added to the public Individual Insolvency Register. It is also placed on your credit file by the three main credit reference agencies.

2. Score Reduction: The appearance of a DRO on your credit report will cause a substantial drop in your credit score. Lenders view it as a serious indicator of credit risk.

3. Restricted Credit Access: During the 12-month DRO period, your ability to obtain new credit will be severely limited. Any new borrowing will be difficult and likely come with unfavorable terms.

4. Long-Term Impact: The DRO will remain on your credit file for six years from the date it was approved. Throughout this period, it will continue to negatively affect your ability to get mortgages, loans, or credit cards.

5. Eventual Removal: After six years, the DRO is automatically removed from your credit report. At this point, you can fully focus on rebuilding your credit score without the DRO holding it down.

How Much Will a DRO Affect Your Credit Score?

The extent to which a Debt Relief Order (DRO) will affect your credit score can vary, but there are some certainties to consider. Here are the key factors that will influence your credit file:

• Credit File Record. A DRO is a formal insolvency solution and will be recorded on your credit file. This notation significantly lowers your score, making it very difficult to obtain new credit.
• Six-Year Duration. The DRO remains on your credit report for six years from the date it was approved. Throughout this period, your ability to borrow money will be severely restricted by most lenders.
• Post-DRO Recovery. Once the DRO is removed, your credit score will not immediately return to its previous level. You must actively rebuild your credit history by demonstrating responsible financial behavior over time.

How You Can Avoid a DRO Affecting Your Credit Score

Consider a Debt Management Plan (DMP)

A Debt Management Plan is an informal agreement to repay non-priority debts. You make one monthly payment to a DMP provider, who distributes it to your creditors. While it still affects your credit file, it can be a more flexible alternative to formal insolvency.

Explore an Individual Voluntary Arrangement (IVA)

An IVA is a formal, legally binding agreement for those with higher debt levels and assets. You make regular payments to an insolvency practitioner for a set period. It offers creditor protection but has a significant, long-term impact on your credit rating and financial freedom.

Negotiate Directly with Creditors

Before pursuing formal solutions, try contacting your creditors. You may be able to negotiate a more manageable repayment plan, a temporary payment holiday, or a reduction in interest. A successful negotiation could help you avoid a formal insolvency process and its credit implications entirely.

Ways to Improve Your Credit Score

Improving your credit score is entirely possible through consistent, positive financial behavior. According to an expert guide for 2025, you can see meaningful changes within three to six months by taking proactive steps.

• Monitor your credit reports. Regularly obtain your free credit reports from the major bureaus to check for inaccuracies or signs of identity theft that could be harming your score.
• Set up automatic payments. Your payment history is the single most important factor in your score, so automating payments ensures you never miss a due date.
• Lower your credit utilization ratio. Aim to use less than 30% of your available credit, as high balances can signal financial distress to lenders.
• Become an authorized user. You can get a boost by being added to the credit card of someone with a long history of on-time payments and low credit utilization.
• Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as credit cards, installment loans, and mortgages.
• Limit hard inquiries. Avoid applying for too much new credit at once, as multiple applications in a short time can temporarily lower your score.

The Bottom Line

A Debt Relief Order will negatively affect your credit score and remains on your credit file for six years, making it more difficult to obtain credit during this period.

Frequently Asked Questions

How long will a DRO stay on my credit report?

A Debt Relief Order will remain on your credit report for six years from the date it was approved, making it difficult to obtain new credit.

Can I get credit after my DRO is over?

Yes, but it will be challenging. Lenders will view you as higher risk, likely offering you credit with higher interest rates or specific credit-builder products.

Will my credit score improve after the DRO is removed?

Your score should improve once the DRO is removed after six years, but rebuilding a good score requires time and demonstrating responsible financial habits moving forward.