Arrangement To Pay

What is an Arrangement to Pay?

An Arrangement To Pay is recorded on a borrower’s Credit File when the lender accepts a request to raise or lower the cost of one or more monthly payments at the request of the borrower. It may increase the duration of the loan or the cost of future monthly payments at the lender’s discretion.

Many borrowers think that taking out an Arrangement to Pay will reflect positively when approaching lenders in the future because it shows their willingness to try and make payments even in times of financial difficulty. In reality many lenders take it as a sign that the customer cannot keep up with their credit commitments and will struggle similarly with their own product.

For that reason, it is not recommended to request an Arrangement to Pay unless it is absolutely necessary. An AR marker stays on your Credit Report for six years and can seriously impact your ability to get credit for the whole duration.


Q: Is an Arrangement to Pay the same as a Default?

A: No. While a lender may view an Arrangement to Pay marker on your Credit File as severely as a Default, they are completely separate. The main difference being that a Default relies on you not having paid an amount owed, whereas an Arrangement to Pay shows that you have paid, but a differing amount than was agreed by the lender.

Q: How does an Arrangement to pay appear on my Credit Report?

A: An Arrangement to Pay is signified on a Credit Report in the monthly status codes as ‘AR’. Your checkmyfile Credit Report will let you see which lender has recorded an AR marker and which Credit Reference Agencies are reporting it.

If you haven’t already, you can try checkmyfile FREE for 30 days, then for just £14.99 a month afterwards, which you can cancel online at any time.

Q: How does an Arrangement to Pay affect my ability to get credit?

The impact of an Arrangement to Pay on your credit rating varies depending on the attitude of lenders. Some lenders regard it as a fundamental inability to pay debts as they fall due (which is one of the definitions of bankruptcy).

Other lenders take a much more relaxed view about an Arrangement to Pay. They would prefer to receive less than expected rather than nothing at all, and they see the approach by their customer to ask for time to pay as a proactive and positive step, and not one that should be penalised.

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