Credit History
If you miss payments then this can stay on your credit report for up to 3 years. However if you are unfortunate enough to have a County Court Judgement (CCJ), or worse still, have become bankrupt then this still stay on your credit report for up to 6 years.
Plus if you are deemed to be what’s known as a reckless bankrupt then expect this to remain on file for up to 15 years.
Having a CCJ will cost you dearly in the long run as a lot of the high street lenders will not be willing to provide you with a loan. However, there are specialist lenders or sub-prime lenders who are willing to provide a loan so not all is lost. Expect interest rates from these lenders to be at least 2-3% higher than normal loan rates.
As you can see having a good credit history is key to getting a loan at the normal market rates. Also note that having a bad credit history may also affect you getting a job. This is especially relevant to the financial sector where employers expect and demand that you have a clean credit history.
Missing mortgage payments can also be seen the lender as a red flag on your account. Especially if you normally pay by direct debit and if you miss a few payments the lender may feel you have taken on too much of a mortgage. And as your mortgage tends to be one of your biggest financial commitments it is very important that you keep up with repayments, and on time too.
If you have a partner and a joint bank account then this can really affect your credit history in the event that your partner has a poor credit history. It can mean that you get turned down for credit so it’s vitally important that you are aware of your partners credit history. And always make sure to shut down any joint-accounts with ex-partners just in case their credit history gets worse after you split.
No excuse for missing payments
There really is no excuse for missing any payments given the ease in which we can access our bank accounts. Being able to check online in seconds and now some banks will send you a text message to let you know when your current account drops to a certain level.
Of course the most effective way to ensure you don’t miss any payments is to setup direct debits. Whether it’s for a loan or credit card the options is always there from the lender so no more forgetting to send the cheque for that months repayment.
And of course remember there is a double-sting to a late payment. Not only can it get onto your credit record but you can also get a late payment charge.
What to do if you don’t have the funds to pay
In this situation you should not bury your head in the sand. Contact your lender straight away and explain the situation. It may well that that your life situation has affected your finances e.g. divorce, redundancy or illness. Most lenders will be happy to accept reduced payments or even reschedule payments to help with your situation.
However if you find that you need additional money and are considering a loan then make sure not to apply for too many loans at once. As if you get refused for a loan then this can appear on your credit report and also for subsequent loan application rejections. Multiple rejections flag to the lender that you may be desperate for finance and as such are a very high credit risk.
The importance of your credit report
It’s vitally important that you keep a close eye on your credit report to see where you stand in the eye of potential lenders. You can easily get a copy for a small fee from agencies like Equifax, Experian and Call Credit.
If you find any entries on your report that are not good then you need to ensure you do enough to clear that entry if possible. It may well be that it’s not a major problem but at least it could show up any unforeseen or un-expected stains which you were not aware of previously.
Conclusion
Missing payments either due to lack of funds or accidentally can cost you dearly in the long run. Take more time with your finances each month and keep all that well earned money in your pocket rather than that of your lender.
Paul Hockney is an online loan expert who provides
secured consolidation loan tips and advice.
