Understanding your energy usage
When using your credit card, it’s easy to think that missing the odd monthly payment here and there isn’t all that much of a problem. But this just isn’t the case.
Fail to make a repayment on time, and the implications can be serious. This is true irrespective of whether you miss a billing cycle, or are just a touch late paying what is due.
Here we take a closer look at what might happen.
First off, you could face an instant ‘missed payment’ fee of about £12.
While that may not sound much in isolation, if you make the same mistake several times, these charges could soon add up.
Missing a payment on your credit card can also cost you your 0% interest rate. This could mean losing the promotional rate on either purchases or balance transfers, or both.
If your 0% introductory offer gets withdrawn, you’ll end up paying more in interest. This will mean your card could get a lot more costly.
One of the biggest implications of a late payment is having it recorded on your credit report.
If a late payment leads to a default or County Court Judgment (CCJ) this could have a really serious impact on your score. Marks can remain on your record for six years.
Your credit score is like a financial CV, setting out how reliable you are with credit. An overdue payment may send a warning sign that you’re struggling to manage your finances.
A tarnished credit rating can make it harder to get access to credit, such as cards, loans and mortgages further down the line.
And even if marks on your credit file don’t stop you getting accepted for credit, they could still mean you miss out on the most competitive rates.
The golden rule of credit cards is that you must make all payments on your plastic on time.
The best way to ensure your credit score remains in tip-top condition is by regularly checking your credit report.
You can do this quickly and easily with our Credit Monitor tool.
The tool will also offer you tailored steps you can take to boost your score.
Steps include making sure you are registered to vote on the electoral roll, borrowing well below your limit on existing cards, and closing down accounts you no longer use. Read more here.
If there’s a valid reason why you were late making a payment on your credit card, such as being made redundant, you can get a ‘notice of correction’ added to your file to explain why this happened.
While details of late payments can be viewed on your credit report for six years after they were settled, this dark cloud won’t hang over you forever.
The impact that missed payments, defaults and CCJs have on your rating will diminish as time goes by, as lenders will be most focused on your recent credit history.
By being disciplined about keeping up with credit card payments going forward, you should see your score steadily improve – eventually making it easier to get access to credit, and at better rates.
Everything you need to know about the wonderful world of car insurance.
Our guide will help you protect your property and possessions.
Discover how to bring down the cost of a major household bill.
Our definitive guide to choosing the right credit card.
Find out how to choose the right life insurance for your needs.
What to consider when picking a current account.
See how travel insurance can help protect your holiday.
Understand the difference between secured and unsecured loans