Arrangement to Pay on credit file - how bad is this for long term credit?

worriedwilf

Hi Everyone

I just spoke to my loan provider regarding taking a payment break for 2 months due to £700 unexpected bills. they have offered to do this but explained that it will mean that I have an 'Arrangement to pay' or (AP) on my credit file.

How much worse is this than a late or missed payment? the lady on the phone said that it probably wouldn't look as bad as it shows that I took responsibility but I don't want to do anything that will really affect my long term credit.

I am looking to move house in 2-3 years ( loan will be paid by then) and will need to apply for a new mortgage.

What impact with this Arrangement to pay have on my future credit? I don't mind taking a short term hit.

Thanks

WW

[Deleted User]

Pretty bad. Worse than a missed payment I would say (assuming that missed payment was then made up and you didn't run into permanent arrears).

An AP suggests you can no longer make the agreed payments and have had to restructure the loan.

Cash_Flow

worriedwilf wrote: »

Hi Everyone

I just spoke to my loan provider regarding taking a payment break for 2 months due to £700 unexpected bills. they have offered to do this but explained that it will mean that I have an 'Arrangement to pay' or (AP) on my credit file.

How much worse is this than a late or missed payment? the lady on the phone said that it probably wouldn't look as bad as it shows that I took responsibility but I don't want to do anything that will really affect my long term credit.

I am looking to move house in 2-3 years ( loan will be paid by then) and will need to apply for a new mortgage.

What impact with this Arrangement to pay have on my future credit? I don't mind taking a short term hit.

Thanks

WW

You would be better off missing a payment than having a AP marker on your file.

worriedwilf

THanks for all of the advice.

So If I just don't pay won't they force me into an agreement to pay anyway??

LeeSouthEast

Potentially - although unlikely - a lender CAN force you into an arrangement if you miss a payment because you've broken your end of the contract. It really depends on the lender. Most are more reasonable than this of course, for just one missed/late payment.

However, as stated above, an Arrangement to Pay is normally worse than a missed payment. A missed payment (1!) can be human error and written off more and more as it gets older and older in your credit history. An AP is seen as a formal admission that ultimately, you can't manage your money and had to restructure a product.

Do you have other options? If you're needing a mortgage in 2 years, a missed payment or an AP will most likely affect this. 3 years for a missed payment, probably a negligible effect. The arrangement will probably still be as negative in 3 years as it would be tomorrow.

Can friends/family lend you the shortfall? Can you shave any shortfall off your outgoings for a month or so? Make the loan payment with a credit card? Sell some stuff? Bite the overdraft bullet? (My point here is, simply not paying it may not be your only option).

forgotmyname

Bit late now perhaps, But maybe an oversight on your part.

Normally pay say £200. Accidently miss a few zeroes off and pay then £20 or £2 even.

Ignore the phone and wait until the letter arrives, Contact them and sound shocked and say you will look into it and get back to them.

Drag it out and hopefully you will have the money to bring it back into line.

Maybe?

Cash_Flow

forgotmyname wrote: »

Bit late now perhaps, But maybe an oversight on your part.

Normally pay say £200. Accidently miss a few zeroes off and pay then £20 or £2 even.

Ignore the phone and wait until the letter arrives, Contact them and sound shocked and say you will look into it and get back to them.

Drag it out and hopefully you will have the money to bring it back into line.

Maybe?

Hard to do when it will be a Loan payment by Direct Debit;)

happy_bunny_2

Who is the loan with?

RBS seem to give you a month before recording a late payment.

Write to them, saying you refuse an AP and you will pay arrears when you can. 1 or 2 months late payments not as bad as AP, especially if you catch them up as soon as you can.

Sometimes APs only stay on for a short time, but then you need to ask what happens to those months on your report when it ends.
Sounds like they are going to leave it on til the loan paid then for 6 years from then.

worriedwilf

Thanks guys but I have decided to use a credit card and pay it off asap ( along with my existing 10K credit card debt!!!)

I don't want to risk taking such a hit to my credit.