Credit Score Basics > How missed payments affect remortgaging

How missed payments affect remortgaging

Wollit Team2 minute read · Updated 1st July 2024

Missed or late payments can have a significant impact on your ability to remortgage in the UK. Lenders view these as a sign of financial instability and may be hesitant to offer you a new mortgage deal.

However, the severity of the impact depends on many factors, like the type of payment missed, the number of missed payments, and how recently they happened.

What counts as a missed or late payment?

A late payment is when you make a payment after the due date set by your lender, but within the grace period. A missed payment, on the other hand, is when you fail to make a payment at all.

Missed payments on secured loans, such as mortgages, are considered more serious than missed payments on unsecured loans, such as credit cards or utility bills.

How do missed payments affect my credit score?

As you can expect, both missed and late payments can hurt your credit score, which is one of the main factors lenders consider when assessing your remortgage application.

Missed payments stay on your credit report for six years, and the more recent they are, the more they will affect your score.

However, the severity of the impact can diminish over time. If you have a good credit history overall, with only a few missed payments that occurred some time ago, lenders may be more willing to consider your application.

Can I still remortgage if I have missed payments?

Yes, you can still remortgage if you have missed payments, but it will be more difficult. Lenders have different criteria when it comes to assessing applications with missed payments, and some may be more lenient than others.

Specialist lenders who focus on bad credit mortgages may be more willing to consider your application, even if you have a history of missed payments. However, you may have to pay a much higher interest rate or deal with other restrictions, such as a higher deposit or a lower loan-to-value ratio.

What can I do to improve my chances of remortgaging?

If you have missed payments on your credit report, here is what you can do to improve your chances of remortgaging:

Check your credit reports with all three credit reference agencies and dispute payments that are incorrectly marked as missed. This happens more often than you think.
Pay off outstanding debts and reduce your overall debt levels as much as possible before applying for a remortgage.
If you are struggling to make payments, talk to your lender as soon as possible to discuss your options. You might be able to take a mortgage payment holiday or make smaller payments for a while.
Add a Notice of Correction to your credit report to explain the reasons behind the missed payment. Lenders might be understanding if they know that you missed a payment because of job loss or illness. You should also address the missed payments during the remortgage application. Lenders appreciate transparency and may be more willing to work with you if you are open about your situation.
Finally, just because you missed a payment doesn’t mean that you should give up on your credit score. Your credit score is not set in stone and you can repair it, even if you have “adverse events” like missed payments on your credit file.

The good news is that now there are many apps that can help you build, repair, and improve your credit score. One such app is Wollit.

Wollit works by reporting a fixed-fee monthly subscription as a loan repayment to all credit reference agencies. This helps you build a history of timely debt repayments, which is the main factor that matters for your credit score.

On top of this, Wollit can also report your monthly rent payment to Experian. This can add another line in your credit report that shows lenders you pay your bills on time, helping you reduce the impact of a single late payment in your overall credit file.