Credit Score Basics > How is your credit score affected if you miss one mortgage payment?

How is your credit score affected if you miss one mortgage payment?

If you’re wondering whether even one missed mortgage payment affects your credit score, the answer is yes.

Your credit score will likely drop once you have even a single missed or late payment on your credit report. How much exactly depends on the size and your situation, but usually, it will be around 50-80 points on the Experian scale.

This might sound small, but it could take you beneath a lender's cut-off point for credit approvals.

However, missed payments can also affect your credit score in a second, more serious way.

If you do not settle your debt and make the late payments within three months, your lender will usually consider you in default and might take you to court.

A default has a much worse impact on your credit score—about 300-350 points, compared to a CCJ, which is about 250 points.

This drop in your credit score might mean that it could hold you back for the six years it’s on your file, and even after that you might have to start building your credit back up from scratch. And while there are things you can do and credit-building products you can use (Wollit is one of them), getting back on track will take a lot of work.

How long do late payments stay on my credit report?

Missing one mortgage payment appears on your credit report after 30 days and stays on it for six years.

However, the impact of a missed payment on your score will reduce over time. This is because lenders usually pay more attention to your most recent credit history. As long as you keep up with future payments, your score should improve over time, making it easier to get approved for credit at better rates.

What should I do if I miss a mortgage payment?

If you've missed a mortgage payment, there are a few things you can do to minimise its impact.

First, try to make the payment as soon as possible. Usually, if you manage to pay within 30 days, the lenders will not even report it to the credit reference agencies. This means that it won't show on your credit report at all.

Next, speak to your lender and explain your situation.

If you don't pay the missed payment within 30 days, you will usually be considered "in arrears", and the lender will report your missed payment to the credit reference agencies (Equifax, Experian, and TransUnion). As a result, you'll see a drop in your credit score. The lender might also add a late fee that you'll need to pay as well.

If you miss the following payment and the late fee as well, your mortgage might not be considered current.

If you still haven't made your payments after 90 days, your account will be marked as defaulted. At this point, your mortgage lender will consider repossession.

Repossession is a last resort – your mortgage lender would much rather you make payments than take your home away. They might offer advice and solutions. In any case, let your lender know as soon as possible if you think you'll struggle to make repayments.

Finally, if you genuinely cannot afford to continue making the payments, speak to your lender about a new repayment plan and seek advice from debt charities like Citizen's Advice, StepChange, or National Debtline.

Do mortgages have a grace period?

Most mortgages have a grace period of 7 to 15 days. The exact period is in your mortgage contract, but you can also speak with your lender and check.

You won't be charged a penalty during the grace period – you'll only have to make the regular payment.

However, once the grace period is over (if you have one in the contract), you will be asked to pay a late fee. This will be added to the usual mortgage payment.

Can I pause mortgage payments?

Depending on the lender, you might be able to negotiate a payment holiday. A payment holiday is when you will not be asked to make any payments towards the mortgage principal – but in most cases, you'll still have to pay interest.

How can I remove a missed mortgage payment from my credit report?

There are only two ways to remove a missed mortgage payment from your credit report:

• Pay it (and any late fees) within 30 days.
• Or dispute the missing payment if it’s an error and shouldn't be in your credit report. In this case, you'll have to contact the lender and the credit reference agencies. While they investigate, a "Notice of Correction" will be added to your credit report, telling other lenders that the missing payment might be an error.

You can also add a notice of correction to your report even if you're not disputing the missed payment. This notice can be up to 200 words, giving you a chance to explain why you could not pay on time – for example, if you lost your job or fell ill.

This is why checking your credit score and credit report regularly is very important. It allows you to see the impact of your actions, fix any errors, and give context so lenders look at the whole picture.

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