Mortgages.scot

I have had a couple of questions related to the impact missed payments that will ultimately show up on credit searches will impact on your ability to get credit in the future.

Hey, just wondered if you could do a piece on your blog about what you think companies will treat people like me who lost a job and found another but missed payments in between. The missed ones will show on a credit report. We are going to suffer, aren't we? Not like it was in our control.

I can remember a time when mainstream lenders would be reluctant to lend even if you had a single missed payment on your credit search. Events change that. Most notably the financial crash in 2008 affected a lot of people. Any lender not willing to lend to those with missed payments after that event would see their lending plummet.

After 2008 even the most prime of lenders had to accept credit searches would have scars on them as a result.

The impact of COVID was something few could control. The decision-making process of whether you could go to work, stores could open, businesses could trade and so on was largely removed and there was little any of us could do.

All lenders should be taking that into account in the future when looking at credit reports and understanding why there are less than perfect and the issues relate to COVID. It is in their interests to do so.

What can you do?

The most important way you can ensure missed payments will not affect your ability to get credit in the future is to ring-fence this event and demonstrate it was the only cause.

By that I mean you can demonstrate that any missed payments and financial difficulties encountered are directly attributed to COVID. Not being able to work, reduced hours, furloughed or losing a job and finding another caused difficulty in the period between.

It will be important that you draw a line in the sand and say after x date you were back up to date and had no missed payments after that date. This is the strongest message to show COVID was the cause.

Update your credit report

You have the opportunity to place a message on your credit file at companies such as Experian, Equifax, Call Credit and others. This is referred to as a "notice of correction". This simply allows you to offer an explanation as to why you missed payments or defaulted on an account. It is not just for saying you disagree with anything on the report.

this can be important, especially when applying for credit where there is little chance of being able to speak to someone to discuss. Things like mobile phone contracts or store cards are often quite bad for not giving you the chance to explain to a person what happened, they just get declined.

For most credit applications that report issues on a credit report, the chances are high that someone will manually review the report even if they never get in touch to discuss it. If they see an explanation attached to the report it may make a difference.

Hope that helps. It's not a perfect world, of course, some lenders will still not lend no matter what you tell them. But I certainly feel a worldwide pandemic that has had far-reaching consequences for us all cannot simply be dismissed. Lenders will take this into account.