Missed Loan Payment - What Will Happen To Your Credit Score?
Not just a single non-payment of your monthly bill will let your credit scores to crash but even a late payment can have the same adverse effect
. When you plan to skip a few payments until next month it is vital to sit down and decide the ones that should first take the hit. The idea here is to understand what will happen in each case. Mostly, people who are stuck in a financial crisis react without thinking. For example; paying a credit card bill when the mortgage is due is never considered a bright move. Remember, your financial survival is completely dependent on such decisions.
Can a Late Payment Harm Your Credit Score?
This is one of the most frequently asked question and the right answer to this is that it definitely affects your credit scores. Make it a point to pay your bills on time, the later you are and the more accounts you have that are delinquent, the more devastated your score will be. A damage caused on to the credit score will remain on records for years. Here are a few essential repayments that you might need to consider before skipping on any of them...
Mortgage: Missing a mortgage payment will have your lender proceeding with the fore closure formalities. Very few of them offer a small breathing space and this might last until 90 days but the rest take it out immediately. In this case, a mortgage lender reports to the credit bureau causing the scores to run negative.
Credit card: Any credit card company would immediately file a report with the credit bureau on a missed or skipped payment. Chances of your credit score getting affected are instantaneous.
Utilities: Many utility companies in the UK charge a late fee however termination of the service doesn't commence immediately. Try calling up the service provider immediately to sort out the issues by explaining what is going wrong.
Car note: Whether it is late or missed payment; in both the scenarios the lender reports to the credit bureau. Higher interest rate can be imposed on the borrower. In most cases, lender can kick off the process of possession even on a single late payment.
Cell phone: The lender will charge a late fee for the missed payment and can have the service temporarily disconnected and impose a charge for reconnection.
Pay day loans: They come in handy when you're in a financial mess. Typically, rendered for short term emergencies which can be repaid with next pay cheque. Payday loan lenders offer service even to bad credit score holders. They inform credit bureau when a loan is repaid on time and this helps improve credit score ratings.
Even if you are struggling try to stick on to a minimum repayment plan for your financial products; by doing this you save your credit score from repair. A damaged credit score in the UK can take you years to bring it back to normal. Since prevention is always better than cure be reasonable enough to save your credit scores from any damage by proper planning and execution.