What to do if you've missed a loan payment

If you've missed a loan payment, understanding what happens next is key to making sure the impact is minimal. If you need debt advice, you can speak to charities like StepChange, National Debtline and Citizens Advice.

Missing a loan payment can happen to anyone, whether it's because of an unexpected bill, a change in income, or simply an oversight. The important thing is to act quickly. Here are the steps you can take straight away to help limit the impact.

Contact your lender

Let your lender know as soon as you realise you've missed a payment. Contacting their customer service team gives you the opportunity to discuss what happened and agree on the steps you'll take to make up the payment. Most lenders would rather work with you to find a solution than escalate the situation.

You can usually find their contact details by scrolling to the bottom of their website and looking for a "Contact us" link.

If you think you might miss an upcoming payment, it's worth getting in touch with your lender before the due date. Under FCA rules, lenders are expected to treat customers fairly, and they may be able to offer forbearance options such as a temporary reduction in payments or a short payment holiday.

Make the payment as soon as you can

If you're able to make the payment, it's a good idea to do so as quickly as possible. The sooner the payment is made, the less likely it is to be formally recorded as missed on your credit report.

Some lenders may allow a short discretionary window before applying fees or other action, but many do not, so you should not rely on any grace period unless your provider confirms it. Any late or missed payment fee should be clearly set out in your credit agreement, and in some cases charges may be applied automatically once a payment is overdue, so it's worth checking your agreement to understand what fees could apply.

Set up automatic payments

To help you stay on top of your finances, consider setting up a Direct Debit for your loan repayments. This means the money leaves your account automatically on the due date each month, so you don't have to remember to make the payment manually. If you set the Direct Debit to cover only the minimum payment, this can keep you from missing a payment, but it will usually mean interest continues to build and it can take much longer to clear the balance. You could also set up calendar reminders a few days before each payment date, giving you time to check you have enough funds in your account.

Missed loan payment timeline: what to expect

If you miss a loan payment, your lender will typically follow a staged process before taking more serious action. The exact timeline varies by lender, but the table below gives a general overview of what happens if you miss a loan payment and how things can escalate over time.

Keep in mind that this is a general guide. Some lenders may move more quickly or more slowly depending on their policies and the terms of your loan agreement. The most important step at any stage is to contact your lender and communicate openly about your circumstances.

Does missing a loan payment affect your credit score and report?

Yes, a missed payment can affect your credit score and report, although the extent depends on the circumstances. If your lender reports the missed payment to a credit reference agency, it will appear on your credit report and could cause your score to drop. A single missed payment that is quickly resolved may have a smaller impact than multiple missed payments or a longer period of arrears.

Rebuilding your score afterwards generally means making all further payments on time and in full. However, it can take some time for your score and report to recover. A missed payment marker can stay on your credit report for up to six years.

You can check your credit report for free through ClearScore - not a credit reference agency itself, but a service that uses data from Equifax - to see how a missed payment has been recorded and to track your progress over time.

How many loan payments can you miss before you default?

If you've missed a loan payment, one of the most pressing concerns is how many payments you can miss before your lender formally defaults the account. While the exact timeline varies between lenders and loan agreements, there is a typical pattern of escalation that most regulated UK lenders follow.

Typical lender escalation timeline

After a single missed payment, your lender will usually contact you by letter, email, or text to remind you that a payment is overdue. If the payment remains outstanding after around 30 days, the lender may send a formal arrears letter outlining the amount owed, any fees that have been applied, and what steps you should take. If you continue to miss payments - typically after three to six consecutive missed payments - the lender may issue a default notice. The precise point at which this happens depends on the lender's internal policies and the terms of your credit agreement, but most lenders will not jump straight to a default after a single missed payment.

What is a default notice and when must the lender issue one?

A default notice is a formal letter your lender is required to send before they can take certain actions, such as closing your account, demanding the full balance, or passing the debt to a collection agency. Under the Consumer Credit Act 1974, the lender must give you at least 14 days to bring your account up to date after issuing the notice. If you clear the arrears within that window, the default may not be registered. If you do not, the lender can proceed with recording a default on your credit report and taking further recovery steps.

The difference between arrears and default

Arrears simply means you are behind on your payments. Being in arrears does not automatically mean you have defaulted. A default is a more serious step - it occurs when your lender formally decides the original credit agreement has been broken and records this with the credit reference agencies. You can be in arrears for several months before a default is issued, and many lenders will work with you during this period to agree a repayment plan.

How a default differs from a missed payment on your credit report

A missed payment marker on your credit report shows that a specific month's payment was late or unpaid. A default, by contrast, closes the account and is treated as a more severe event by future lenders. Both a missed payment and a default can remain on your credit report for up to six years, but a default typically has a much larger impact on your credit score and your ability to access new credit, including mortgages and other loans. If you're unsure how your account has been recorded, you can check your credit report for free through ClearScore.

Does a missed loan payment affect getting a mortgage?

If you're planning to apply for a mortgage, a missed loan payment on your credit history can be a concern. Mortgage lenders look closely at your credit report when assessing your application, and how they view a missed payment depends on several factors.

How mortgage lenders assess missed payments on other credit

When you apply for a mortgage, the lender will review your full credit history, including any missed or late loan payments. Most mortgage providers consider the recency of the missed payment, the severity (a single late payment versus several months of arrears), and whether the account has since been brought up to date. A recent missed payment is likely to carry more weight than one from several years ago, and a pattern of missed payments will be viewed more seriously than an isolated incident.

How long you may need to wait after a missed payment before applying

There is no fixed rule, but many mainstream mortgage lenders prefer applicants who have had a clean credit record for at least 12 months. Some lenders may accept applicants with a missed payment that is more than six months old, particularly if it was a one-off and all payments since then have been made on time. If you have a default or multiple missed payments, you may need to wait longer or look at specialist mortgage lenders who cater to borrowers with adverse credit histories.

Satisfied vs unsatisfied arrears and what mortgage lenders prefer

If you fell into arrears on a loan, mortgage lenders will want to see that the arrears have been satisfied - meaning the overdue balance has been fully repaid. Unsatisfied arrears, where money is still owed, are a red flag for most lenders. Clearing any outstanding arrears before applying for a mortgage can significantly improve your chances of being accepted.

Steps you can take to improve your chances

If a missed loan payment is on your credit report and you're working towards a mortgage, focus on making all future payments on time and in full. Reduce outstanding debt where possible, avoid applying for new credit in the months before your mortgage application, and check your credit report for any errors. You can monitor your credit score for free through ClearScore, which uses data from Equifax, to track your progress and see how your profile changes over time.

Can you reduce your loan payments?

If you're finding it difficult to keep up with your loan repayments, speak to your lender about your options. They may be willing to restructure your agreement, for example by extending the loan term to bring down the monthly payments. However, bear in mind that extending the term usually means you'll pay more interest overall.

Your lender might ask for evidence that you're struggling financially, such as a budget showing your essential outgoings (rent or mortgage, utility bills, food, transport, and similar costs).

If they agree to reduced monthly payments, this arrangement may be recorded on your credit report. For example, it could appear as a part-payment or forbearance marker. While this can affect your credit score and report , it is typically treated differently from a late or missed payment and shows future lenders that you took responsible action.

The lender should also clearly explain any changes to interest, additional charges, or adjustments to the total amount you'll repay under the new arrangement.

Can you freeze your loan payments?

If you're struggling to make repayments, it's worth speaking to your lender to understand what temporary relief they can offer. Some lenders allow payment holidays or other forms of forbearance, depending on their policy and the terms of your agreement.

Freezing payments or payment holidays

A payment holiday means you temporarily stop making repayments for an agreed period, usually one to three months, while you get your finances back on track. During this time, you won't need to make your regular monthly payment.

However, in most cases interest continues to build up during the payment holiday. This means the total amount you owe will increase. Before agreeing to a payment holiday, make sure you ask your lender what the total amount you'll need to repay will be once the holiday ends, so there are no surprises.

Freezing interest on payments

In some situations, a lender might agree to freeze the interest on your loan for a fixed period. This means you'd continue making repayments, but no additional interest would be added during that time, so the overall cost of the loan would be lower than it would otherwise have been.

A lender's interest freeze or other forbearance arrangement may be recorded on your credit report, and the way it's reported can vary between lenders. Ask your lender directly how any arrangement will appear on your credit report. It's also worth knowing that defaulted or missed payments can remain on your credit report for up to six years.

Should you get a debt consolidation loan?

Debt consolidation means taking out a new loan to pay off one or more existing debts. This can simplify your finances by combining multiple repayments into a single monthly payment, potentially at a lower interest rate.

Whether you'll be offered a consolidation loan depends on your Equifax credit score, credit history, and other factors lenders consider. If you have a score in the Let’s start climbing band (0-409), you may still be able to find a loan, as some lenders specialise in loans for people with limited or lower credit scores histories. However, the interest rates on these products tend to be higher, so it's important to compare the total cost of the new loan against your existing debts to make sure you'd actually be better off.

As a broker, ClearScore can help you compare loan options by showing you products you may be eligible for based on your credit profile. Eligibility is checked using a soft search, which won't affect your credit score and report or report. ClearScore is a credit broker, not a lender.

What happens if you can't repay your loan?

If you're unable to repay your loan, the most important step is to contact your lender as early as possible. Under FCA guidelines, lenders are required to treat borrowers in financial difficulty with forbearance and due consideration.

Your lender should refer you for independent debt advice, but you can also reach out directly to free debt charities such as National Debtline, StepChange, and Citizens Advice.

If you default on your loan, which happens when you break the terms of your agreement and your lender formally treats the account as in default, the lender could take steps to recover the money. This might include appointing a debt collection agency, obtaining a County Court Judgment (CCJ), or beginning other legal proceedings. A default will be recorded on your credit report and can significantly affect your ability to borrow in the future.

Where to get help

If you're worried about repaying your loan, free and confidential help is available. Several UK charities are dedicated to supporting people experiencing financial difficulties:

• StepChange Debt Charity offers free, expert debt advice online and by phone. You can get a personalised debt plan based on your circumstances.

• National Debtline provides free advice over the phone and has a range of online fact sheets and tools to help you understand your options.

• Citizens Advice can help you work through your debt problems and understand your rights, either online, by phone, or at a local bureau.

• MoneyHelper (backed by the Money and Pensions Service) provides free, impartial guidance on managing debt and budgeting.

Frequently asked questions about missed loan payments

Will I be charged a fee for missing a loan payment?

Many lenders charge a late or missed payment fee, but the amount varies depending on your loan agreement. Your lender should notify you of any charges before applying them. Check the terms and conditions of your loan to see what fees may apply, and contact your lender if you are unsure. Under FCA rules, any charges must be reasonable and clearly communicated.

Can a missed loan payment lead to a CCJ?

A single missed payment on its own is unlikely to result in a County Court Judgment (CCJ). However, if you miss several payments and do not engage with your lender or come to an arrangement, the lender may eventually take legal action to recover the debt. A CCJ is recorded on your credit report for six years and can make it much harder to access credit, rent a property, or pass financial checks.

Does one missed payment show on your credit report?

Yes, even a single missed payment can be recorded on your credit report if your lender reports it to a credit reference agency. Most lenders report missed payments once you are 30 or more days overdue. The marker will remain on your report for up to six years, although its impact on your credit score lessens over time as you build a track record of on-time payments.

Can you remove a missed payment from your credit report?

If the missed payment was recorded correctly, you generally cannot have it removed early. However, if you believe the marker is an error - for example, the payment was made on time but not processed - you can raise a dispute with the credit reference agency or contact your lender directly to ask them to correct the record. You can check how payments have been recorded by viewing your credit report for free through ClearScore.

Will missing a loan payment affect your partner's credit score?

Missing a loan payment on an account that is solely in your name will not directly affect your partner's credit score. However, if you have any joint financial accounts - such as a joint loan, joint bank account, or joint mortgage - a financial association is created between you. In that case, a lender reviewing your partner's application may also look at your credit history. If you are concerned about financial associations, you can check your credit report to see if any are listed.

Priority vs non-priority debts

If you have several debts, such as a loan and a credit card, it's important to understand which ones are priorities. Priority debts are those where the consequences of not paying are most serious. These typically include rent or mortgage arrears, Council Tax, utility bills, and court fines. Falling behind on these can lead to losing your home, having your energy supply disconnected, or facing court action.

Non-priority debts, such as credit cards, personal loans, and store cards, are still important, but the immediate consequences of missed payments are generally less severe. That said, non-priority debts can still lead to legal action and damage to your credit score if left unpaid.

A good approach is to list all your debts, compare the total cost of each (including interest rates, fees, and any penalties), and work out a realistic budget. If you need help creating a personal budget or deciding which debts to tackle first, the free debt charities listed above can guide you through the process.

Related topics

• What happens if you can't pay your credit card?

• What happens if you miss a credit card payment?

• What happens if you miss a mortgage payment?

• What happens if you can't pay your personal loan?

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