Is a 7 year penalty for a single missed payment massively disproportionate?

Charlesn2

I have just written to my MP about this issue. Thoughts from the board appreciated. 7 years is along time for one's life to be affected by a single missed payment.

"Dear Mr. Rankin,

 

I am writing to express my concerns regarding the current system of reporting missed payments on consumer credit files, which I believe is wholly unfair and disproportionate.

 

Under the current system, if a consumer misses a single payment on any of their credit cards, store cards, personal loans, phone contracts, energy contracts, mortgages, etc., it affects their credit report for a total of seven years. As a result, individuals like myself are unable to obtain a new mortgage or any new lending for seven years from the date of the missed payment.

 

This extended penalty period and its impact on consumers' lives is disproportionate to the mistake, which can easily happen to anyone, especially in an era where multiple consumer contracts are common. Most people have at least 5 to 10 consumer credit agreements or a mortgage, resulting in 60 to 120 monthly payment obligations in a single year. Missing just one of these payments can severely impact their lives for seven years.

 

I believe this system is very unfair and needs to be reformed. I kindly request your assistance in addressing this matter.

 

Yours sincerely."

born_again

Charlesn2 said:

I have just written to my MP about this issue. Thoughts from the board appreciated. 7 years is along time for one's life to be affected by a single missed payment.

"Dear Mr. Rankin,

 

I am writing to express my concerns regarding the current system of reporting missed payments on consumer credit files, which I believe is wholly unfair and disproportionate.

 

Under the current system, if a consumer misses a single payment on any of their credit cards, store cards, personal loans, phone contracts, energy contracts, mortgages, etc., it affects their credit report for a total of seven years. As a result, individuals like myself are unable to obtain a new mortgage or any new lending for seven years from the date of the missed payment.

 

This extended penalty period and its impact on consumers' lives is disproportionate to the mistake, which can easily happen to anyone, especially in an era where multiple consumer contracts are common. Most people have at least 5 to 10 consumer credit agreements or a mortgage, resulting in 60 to 120 monthly payment obligations in a single year. Missing just one of these payments can severely impact their lives for seven years.

 

I believe this system is very unfair and needs to be reformed. I kindly request your assistance in addressing this matter.

 

Yours sincerely."

It's 6 years & your credit history, that has a missed payment marker.
Most lenders would not be bothered by a single missed payment after a couple of years.

Simply setting up a DD, which consumer credit is the norm stops missed payments.

CliveOfIndia

Records of missed payments (or anything else) drop off your credit file after 6 years.

And a single missed payment in an otherwise unblemished credit history will have a very small effect overall.  I'd be very surprised if it prevented you obtaining a mortgage or loan.  You might be offered an ever-so-slightly less preferential rate, but it's highly unusual for a single "misdemeanour" to prevent access to credit completely.

Multiple missed payments, of course, are a different matter.

Charlesn2 said:

which can easily happen to anyone, especially in an era where multiple consumer contracts are common. Most people have at least 5 to 10 consumer credit agreements or a mortgage, resulting in 60 to 120 monthly payment obligations in a single year.

Just make sure you've got Direct Debits set up then you don't have to worry about it.

With respect, it sounds like you're making something of a mountain out of a molehill.

Brie

Should the missed payment be something to note on a credit history it will only be because of a number of other things.  Too much credit being taken out in quick succession, obviously paying the minimum on CCs for years, plus all the other usual suspects - CCJs, frequent moves, not being on the electoral register.  

Phoenix72

Lenders are entitled to know the level of risk they are taking on and price accordingly (or refuse credit). Nobody has to give you credit and all data is retained under GDPR time limits - unless you want that changed?

You will get the standard 'sympathetic' reply from your MP but you are really wasting your time. CRA's are tried and tested.

Charlesn2

Unfortunately, a single missed payment does affect your borrowing for 6 years, or possibly 7 depending on the company you are dealing with. Yesterday I tried to get a buy-to-let mortgage with TSB, but they refused me oin the grounds of a single missed payment 3 years ago, and asked me to come back in 3 years!

Charlesn2

To those kind people who have responded to say that a single missed payment has a negiligle effect, that is simply not the case. I have been refused a mortgage on two occasions in recent months and I can no longer take out loans or credit cards.All because of 1 missed payment 3 years ago. I have no other blemishes on my file. I have over 150 payment events every year, and in the past 3 years I have had over 450 payments 'on time' and just one missed payment. No CCJs or any of that nonsense.

Phoenix72

Charlesn2 said:

Unfortunately, a single missed payment does affect your borrowing for 6 years, or possibly 7 depending on the company you are dealing with. Yesterday I tried to get a buy-to-let mortgage with TSB, but they refused me oin the grounds of a single missed payment 3 years ago, and asked me to come back in 3 years!

As is there perogative. Other lenders will approve so you can't say you are unable to obtain a new mortgage. And BTL is a different beast anyway.

Phoenix72

Maybe there's other things on your credit report they don't like? One missed payment would not have the effect claimed. 

Charlesn2

It is SEVEN years, not six.
Let's be accurate people. This statement is on Experian's own website:
"Late payments remain on a credit report for seven years."

Charlesn2

I know there are people out there who are affected. Don't be shy. Please post. Change will only come about if we stick together.