Will my credit rating suffer if I miss a loan repayment?
Missing a payment on any loan will be reported to credit agencies and could impact your ability to borrow money in the future.
Your credit rating could be affected by you missing a payment on your loan, as it’ll be reported to credit agencies and recorded on your credit file. Not only could it lower your score, it could cause problems in other ways, too.
That’s because if you apply for something like a loan or want a car on finance in the future, a lender will look at that old missed payment on your credit file and feel there’s a chance you won’t pay them back.
Because of that, or in combination with other factors such as your credit rating, a credit company might reject your application. That’s more likely to happen if the missed payments are within the last year.
Unfortunately, it’s not a situation where making the payment a little bit later can undo the damage. If you pay even a week later, it’ll still show on your credit report.
However, making more payments on time, paying off loans completely and not doing anything else that might change your score for the worse will show other lenders you’re able to manage repayments.
It applies to things like bills and credit card payments, not just loans
Many things are recorded on your credit file, including household bills and whether you paid them on time and in full. The same goes for credit card repayments too.
The upshot is to always make sure you’re paying back money when you’re supposed to.
You’ll also be in arrears
Don’t forget that missing a payment on a loan doesn’t mean that the amount is wiped off. You still owe it because you haven’t paid it. If you miss your regular £20 payment one week, next time you’ll have to pay your regular £20 and the further £20 you missed from before.
You’re in what’s called arrears [link to: ‘Jargon Buster: Bad Credit’] – in other words, you’re behind on your payments. The same applies if you reduce the amount you pay. For example, you could be paying £15 a week and drop it to £5. Although you’re paying £5, you’re actually still £10 in arrears each week, so you’ll have to make more payments until you’ve paid off the loan. What’s more, the fact that you’re repaying a reduced amount will be recorded on your credit file.
Is there any way I can avoid missing a payment on my Provident loan?
At Provident, we’re different
We understand that life is never smooth, and that there may be times when customers are unable to repay their loan. When this happens, we don’t add any extra fees or charges to your loan repayments. Instead, we contact you to understand what’s happening and work out what to do next.
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