missing a repayment

What Happens if you Miss a Repayment?

It’s not uncommon, even if you are the most responsible person. Sometimes it is because the payment date truly does slip your mind and you simply forget to make the payment. Other times, however, you really don’t have the money available, and you aren’t able to make a payment on a loan or an account you owe. What do you do then? If you have a stellar repayment history this likely doesn’t happen much, and it won’t impact you. However, if you aren’t a first-time offender, this can greatly diminish your score even further down than it already is. So, consider these tactics if you are late, or if you know you are going to miss a payment.

Contact your lender

You’d be surprised to learn most lenders are more lenient than you think. And, if it is a first late payment, or if you have the means to repay before you are late (60 days, or two payment terms) this likely won’t impact your credit score at all. Credit reporting agencies aren’t informed unless you miss two payments in a row. So, as long as you can make the payment, and get back on track, the first thing you should do is inform the lender, so they won’t put any red flags or derogatory marks on your account.

Find out your grace period

If you can make the payment within that period, even if it is late, it usually won’t affect your score at all. This is why it is important to notify your lender. Most cards/lenders offer a grace period of 15-days, or a couple of weeks. As long as you can remedy the late payment in that time period, you won’t be affected adversely, and your credit score likely shouldn’t suffer at all from not making the original payment on time to your lender. Of course, you don’t want to make this a habit either, as creditors will eventually contact credit agencies, so make sure you can keep up with your credit payments and aren’t overspending foolishly on accounts.

Don’t avoid it entirely

This is the worst thing you can do. Many people think if they keep ignoring calls or ignore creditors they’ll go away. This isn’t the case. Work something out. Often creditors might set up a payment plan with you or allow you to pay a lower amount for a few months. The worst they can do when you contact them is say no, so it is worth at least asking and learning your options if you are going to be late or have to miss a payment for any reason.

As long as you don’t plan on making it a habit, missing one payment isn’t going to throw your entire credit history into the trash; in fact, most creditors will work for you if you are responsible and have always paid in the past on time. So, make sure you take the right steps, and don’t simply ignore the situation. Talk to your creditors, learn your options, and find the appropriate help, so you can get back on track with your loans and open lines of credit.