Will missing payments on my Catalogue affect my credit rating?
Pay monthly Catalogues with credit are a great way to build or rebuild your Credit rating, if you spend on them and pay back on time each month without missing payments.
Missing one Catalogue payment isn't the end of the world
Miss payments and the good work in building your credit rating can be damaged. If you have missed one payment then the affect will last a short time.
What happens if you miss more than one payment?
If you miss more than one payment then your credit rating is going to be affected, in fact your credit score will fall faster than Arsenal's Champion League hopes.
As soon as you are late in paying your account is going to be transferred to a department who will call you and send you letters and emails in an attempt to clear the outstanding payment.
Once your account is two payments behind this action will be stepped up and will result in more calls and more emails and a letter warning you about the affects of missing repayments which will probably spell out the fact that your account is now in serious arrears and could be terminated.
What if I miss 3 or more repayments?
As soon as your account is two payments or more in arrears you are technically in default of the credit agreement you signed up to. This means the Catalogue company are within it's rights to issue a default notice.
Will a default notice affect my credit rating?
The default notice will provide you with 14 days to bring your account back up to date, this is very important, should you ignore this notice it's likely a default will be issued, this means your account relationship with the Catalogue has broken down.
It also means your entire balance is now due, the rights to pay in instalments has ended and the Catalogue company can demand the full balance owed. Charges may also be added to your account and if they take legal action they can apply for all costs to be added along with interest
What happens if I ignore the default ?
At this point the Credit Reference agencies are likely to report your default and this will last for six years, this will affect your ability to obtain credit. If you ignore the notice the Catalogue has a few more options available to it
Passing your debt to a debt collector
Your catalogue company may ask a debt collector to contact you or it may sell the account and debt to a debt purchasing company. This means all rights to the debt will be passed to a Debt collection company
Do I have to pay the debt collector?
Once your account is with a debt collection company and as long as they follow the law correctly the debt will be owed to them. You can contact a debt collector to arrange paying in monthly instalments
What if I ignore the debt collector?
Eventually it could become more serious. A debt collection company will attempt several times to engage with you before realising you are not going to make the repayment. If you haven't called to discuss your circumstances with them they will believe you are just simply refusing to pay and could start legal action through the courts, this means you could effectively end up with a county court judgement and this will seriously damage your credit rating.
What if I can't pay?
Speak to your Catalogue company as soon as you know you are having financial problems. They will not judge you, in fact, the earlier you contact them (even before you miss the fist payment) the more they can do to help you.
AS special payment plan (sometimes known as a Payment Arrangement) can be set up on your account, this may affect your credit rating a little for a short period, but it's not as harmful as missing repayments or defaulting.
A payment arrangement means you agree to pay a lower sum or even take a break from repayments for a set period. Interest may also be reduced or frozen to help you through the period.
Talk to your Catalogue company as soon as you feel you are having problems, in our own experience, they were wonderfully helpful and appreciated the chance to work with us rather than allowing our debt to escalate out of control.
Catalogue companies may freeze credit limits until the account arrears are cleared but you shouldn't be thinking about borrowing when you are having problems paying back. Even if it's a short term issue, stay in touch with your Catalogue company, they have people trained to listen and help.