How will a late payment impact my credit score?

It happens all of the time, all over the UK, so let's just say for talking sake that you missed a recent credit card payment or unsecured loan payment. Maybe you were away on holiday or a business trip, the dog ate the statement or you simply, and innocently, forgot to make the payment. Whatever the reason it's a big and sometimes costly mistake to make.

But the reality of the situation is that you will likely be fine. Maybe the credit card provider will apply an inconvenient late payment charge but it's unlikely to go any further. Relief? You should request a free credit report just to put your mind at rest. Remember, the way a provider determines your credit worthiness is from the data contained within the credit report so you can prepare in advance of any applications so you know the facts.

Most credit card providers will not take any formal action with the credit report agencies. Your late payment will more than likely go unreported and will be dealt with quickly when you explain and make the late payment. Please make sure you call and pay as soon as you realise to avoid any blemishes on your credit report.

If you have let the missed payment run for a longer period of time, say 2-3 months, then it is highly likely that the credit card company or loan provider will report this to the credit reference agency. In this case there will be an endorsement on your credit profile which will be visible to any companies you are looking to secure credit from.

If you have an otherwise perfect credit report this will likely cut you off from some of the lowest interest rates around but there may still be good options open to you.

Our advice:

• Obtain a free copy of your credit report
• Employ the services of a good loan broker
• Speak to your Bank, the one who you pay your salary to (they know the most about you)
• Use a price comparison website and see what is on offer for those with an "average" credit history
• It may be the case that some providers will take a fair view on one-time mistakes, but will penalise those who have a track record of failing to pay on time.

To avoid any further problems you should set up a direct debit payment schedule for all loans and credit cards so you have the peace of mind knowing that at least the minimum payments are being made, on time, every month.

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Disclaimer: Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Loanz.co.uk are licenced credit brokers with licence number 584328 issued by the Office of Fair Trading. Loanz.co.uk is a trading style of CML Web Services Ltd. Registered in Scotland. No: SC291366

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