Default/late payments

Happydays19

This probably sounds very silly but can somebody please explain the difference between late payments and defaults? My credit report shows late payments on credit cards is this as bad or e same thing as a default ?

YorkshireBoy

Defaults are far worse than late payments. They're generally put on your credit report when you've missed 6-8 consecutive payments. You'd need to look at the CRA's notes to your file to see how a defaulted account would appear, but typically your payment history would look something like...


D6543210000100110000...


...where the first numbers are the most recent months.

Happydays19

Ok, that's great, thank you very much for explaining

Thrugelmir

To be technical a default is when payment is not made to contractual terms. However a lender isn't going to register a default with a credit reference agency purely because a payment is made 2 weeks late. Normally it's regarded that an account is in default by the time 3 months payments have been missed, though often it's 6 months before a lender files a formal notification with CRA's.

A large number of late payments will have a cumulative effect on your credit rating and will impact your ability to obtain further credit. Lenders will have their own policies as to how many and in what period of time.

CKhalvashi

Thrugelmir wrote: »

To be technical a default is when payment is not made to contractual terms. However a lender isn't going to register a default with a credit reference agency purely because a payment is made 2 weeks late. Normally it's regarded that an account is in default by the time 3 months payments have been missed, though often it's 6 months before a lender files a formal notification with CRA's.

A large number of late payments will have a cumulative effect on your credit rating and will impact your ability to obtain further credit. Lenders will have their own policies as to how many and in what period of time.

This is correct in the industry guidance, too.

The borrower should have a chance to sort the problem out, before seriouly adverse info is put on the file.

Happydays19

My husband missed 3 payments on one card, it is showing as red on the credit report but when I click on it it says late payments.

I am new to remain the credit reports. So sorry of I sound stupid, but how does a default show on the report?

YorkshireBoy

Happydays19 wrote: »

I am new to remain the credit reports. So sorry of I sound stupid, but how does a default show on the report?

Which credit reference agency report are you looking at?

Masomnia

Interesting. I made a late payment on one of my cards a year ago through being daft, and finally got round to checking my credit file this month and it wasn't there, which confused me a bit. Now I know why!