What is the difference between a late payment and arrears?

Late payments generally refer to the occasional odd late payment against an account and usually, provided that the payment is made within the same month that it is due (albeit after the actual due date) most lenders will not report it as a missed payment to credit agencies.

Being in arrears refers to payments which have remained unsettled for more than one month. If you owe more than any current month’s repayment, you will be considered to be in arrears on that account.

How do late and missed payments affect my credit score?

Late payments stay on your credit history for six years, as do missed payments and defaults, but they appear differently on your credit report.

Lenders assessing them will see a small number next to each late payment to advise them how many months late the payment was – i.e. 1 month, 2, 3, etc.

A late payment might be ignored by lenders and have no or little impact on your credit score if it took place two to three years ago.

A missed or default is considered more serious. A mortgage lender will see the amount owed and the duration it took to pay off. The more recent they are will affect whether mortgage lenders will consider you.

Can I get a Mortgage with Late Payments?

Absolutely, but this might be when you need our help. We have access to specialist lenders that are not on the high street which can still offer specialist rates.

For a New Mortgage After Late Payments?

Yes, absolutely, we might be able to help support you in getting a mortgage with our specialist lenders. 

Late payments will remain on your credit report for six years. This means that for those six years your chances of securing a competitive mortgage deal are potentially going to be affected.

Typically, the older your late payments, the less of an impact they’ll come to have on your mortgage application. For example, if you were to have one or two missed payments in the last six years, whilst this wouldn’t necessarily mean that your application will be declined, it might mean that your offer will come with a request for a higher deposit or with a higher rate of interest.

Multiple missed payments or new missed payments in the past twelve months are likely to have a far bigger impact on your application.

It is important to remember that whilst late payments can affect your chances of mortgage approval, you do not have to wait until late payments are gone from your record before you can apply for a mortgage.