Results of Missing a Payment
08 Oct 2007 Tell a Friend
Due to five interest rate increases in the past year, interest rates on mortgages and personal loans are extremely high. According to Karen Beavis of MoneyExtra.com, 3 per cent of loan customers have missed a payment in the last six months, which comes out to 7,716 missed payments each day. This is an increase of an full percentage point compared to 2006.
Even though accidentally missing a payment does show up in your credit report, most lenders will recognise a single missed payment as a mere slip up on your part, and they will overlook it when considering you for a loan. However, if you have regular missed payments on your credit report, this is a good indicator to prospective lenders that you will miss a payment if they lend to you as well. Many lenders may choose not to lend to you because of your high associated risk. Other lenders may choose to lend to you, but they will only do so if they charge you a higher interest rate than they would for someone without missed payments.
Missed payments remain on your credit report for up to 36 months, but CCJs, arrears, and bankruptcy remain on your report for up to six years. Most lenders will overlook you if you have got bankruptcy or arrears in your financial past, but there are some lenders, called sub prime lenders, that will work with you even if you've got a CCJ on your record.
On the other hand, if you have got a clean repayment history, no history of CCJs, and if you have got a controllable amount of debt in your credit report, lenders will be much more likely to want to lend to you. Not only will they want to lend to you, but you will be more likely to be able to get a competitive interest rate.
Lenders will not only look at your credit report when deciding whether or not to lend to you. Here are a couple of other things to keep in mind:
- In addition to your credit report, creditors will also look at the person you have got joint accounts with or the person you have got a shared mortgage with. If this person does not have clean credit history, this will reflect on you, and it may hurt your chances of being approved for a loan.