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

Phoenix72

Charlesn2 said:

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."

Well, if you are going to quote from US Experian you will have the wrong info

Brie

Personally I think this was simply an easy peg for them to hang a refusal on.  There's going to be more to it than a single missed payment - I can't be convinced otherwise.  

And from Experian's website.....

How long do late payments stay on my credit report?

If a late payment is recorded on your report, it will stay there for six years. However, its impact on your score will reduce as the record ages. This is because lenders usually pay more attention to your most recent credit history. As long as you keep up with future payments, you should see your score improve over time, making it easier to get approved for credit at better rates.

electriccactus

I can guarantee that if what I suspect you want to happen (CRA reporting being reduced to say 3 years, just long enough for your misdemeanour to vanish) then all that will happen is everyone will end up paying higher rates to borrow.

There's no such thing as a free lunch. If lenders have their visibility reduced, they will increase rates to compensate for this.  The risk doesn't magically reduce just because they can't see as far back as they could.

I have no issue with the current system. If TSB want to be picky and refuse mortgages for people with 3 year old minor blemishes, that's their prerogative.  I suggest speaking to a broker rather than DIY'ing this, a decent broker is worth their weight in gold.

Nasqueron

You missed a payment, why should the lender not inform other potential lenders of your past behaviour so they can judge if they want to lend to you? What you are asking is to change the system to essentially hide people's poor financial management from other lenders? Absolutely not - it will harm everyone else as lenders increase rates and fees to cover the risk to them.

A single missed payment leading to a single lender refusing you isn't reason to change the entire system - just use a broker, people with far worse credit histories have got mortgages before - perhaps keeping you out of buy to let so someone else can buy a home is no bad thing

Hoenir

Charlesn2 said:

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.

Somewhat unlikely. The decline will be for other reasons. Did you use a mortgage broker? 

saajan_12

Charlesn2 said:

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."

Accuracy also needs reliable data. I also know people who have the odd missed payment but have mortgages just fine. Annecdotes about neither your case nor theirs provides any reliable sample size to base any decisions. Individual cases may be affected by other things - eg you were a borderline case anyway, or they had an otherwise strong application and/or chose a more flexible lender. 

If you want change, then I suggest finding broader data with stats on the effects of single missed payments over a 7 year period. 

noitsnotme

Charlesn2 said:

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."

Not sure where you're looking but Experian UK says 6 years...

https://www.experian.co.uk/consumer/guides/late-payments.html

MEM62

Charlesn2 said:

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."

Yep, let's be accurate.  We can start with looking at the right website  :-)

One missed payment from three years ago will not prevent you from getting a mortgage.  I just won't.  There are other factors at play in the decline.  

molerat

MEM62 said:

Charlesn2 said:

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."

Yep, let's be accurate.  We can start with looking at the right website  :-)

One missed payment from three years ago will not prevent you from getting a mortgage.  I just won't.  There are other factors at play in the decline.  

Likely too much in outgoing commitments

I have over 150 payment events every year, and in the past 3 years I have had over 450 payments