Results of Missing a Payment

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, 3% 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 entire percent over 2006.

Even though accidently missing a payment does show up in your credit report, most lenders will recognize 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'll only do so if they charge you a higher interest rate than they would for someone without missed payments.

Missed payments remaining 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 gotten a clean repayment history, no history of CCJs, and if you have gotten 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 they will probably give you an interest rate that is right on point with the market 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 gotten a shared mortgage with. If this person does not have a clean credit history, this will reflect on you, and it may hurt your chances of being approved for a loan.
  • The size of your loan will have an affect on whether or not a borrower will want to lend to you. The more debt you have, the higher the risk you are to lenders, so if you've already got a large amount of outstanding debt, creditors will be less likely to lend to you.
  • The number of loans you apply for has an affect on how lenders see you. Each time you apply for a loan, a note is made on your credit report. If you apply for a large number of loans, lenders may see this as desperate, and they may take it as a sign that you will not have the money to repay the loan if they choose to lend to you.

Let us conclude not by focusing on what will happen if you miss a payment, but instead, let us focus on how to avoid missing a payment in the first place. Here are a couple suggestions:

  • Set up direct debit from your bank account to pay your loan, credit card, or mortgage payments. This way, you will not have to stress about remembering to make your payments each month, and they will automatically be deducted from your bank account.
  • Keep an eye on your bank account to be sure that you will have enough money to make your payment when the time comes. If you foresee a problem in making your monthly payment, contact your creditor as soon as you possibly can. They will most likely be happy to work with you to take care of the issue so it does not become a full blown problem.

Source by Jon James

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