Brits risk their financial future by missing crucial bill payments

Over one in six (18 per cent or 9 million Brits) missed a payment for at least one bill in the last 12 months, potentially putting their financial future at risk by damaging their credit profile as a result, with credit cards coming out on top as the most missed payment, according to research from MoneySupermarket.
 
The research found that worryingly, three million people had missed a credit card bill in the last year (6 per cent). It seems that council tax is one of the most common costs where people have delayed payments, as two million people missed a council tax payment (4 per cent) last year. Mobile phones, and electricity bills were also high up on the list as payments most missed (3 per cent each), and two per cent of people claim they have failed to pay their rent payments.
 
Additionally, a fifth (22 per cent) worry about what missing a payment could do to their credit rating, while a further 23 per cent say they don't even think about it. Breaking this down by age groups, those aged between 25-34 are the most worried about how their credit rating could be affected (40 per cent), in comparison to 30 per cent of 18-24 year olds.  A further 16 per cent of adults have found that having a bad credit rating, or lower credit score than they thought, has stopped them from gaining further forms of credit.
 
Kevin Mountford, Head of Banking at MoneySupermarket, said: "With times being so tough for most UK households and spare cash being tight it is easy to see why people may have difficulty in paying bills on time, or in some cases at all. However, while delaying payment on some types of bills won't impede your credit report, being late on others can have a major impact on your financial future, with credit cards being the most missed payment according to our research. A late or missed payment on a credit card bill not only shows on your credit profile, but will also lead to the loss of promotional rates on the card, which can be a costly mistake. For example, missing your first payment on a 12 month 0 per cent credit card deal with a £2,000 balance would cost an additional £309 in interest over the 12 months if you moved on to an average credit card rate of 17.69 per cent. Therefore, prioritising your monthly obligations and setting up a direct debit for the most vital bills is a must for those who tend to forget to pay by their deadline.
 
"Missing a payment could also have a knock-on effect for future applications such as credit cards and mortgages. Those applying for a credit card need to prove they can make regular and stable payments and any black marks against a credit profile would hinder chances of being approved. For those who have missed payments affecting their credit file, MoneySupermarket has a SmartSearch credit profiling tool which matches applicants with the most suitable products based on their individual credit score, but does so without leaving a footprint on the applicant's file."
 
The MoneySupermarket research also asked what people thought could damage their credit profile, with Brits identifying bankruptcy (68 per cent), missing a payment (63 per cent), and having CCJs on your file (61 per cent) as the top three reasons they believe can affect a credit rating.
 
Kevin Mountford continued: "It is important that people are clear on what could damage their credit profile to make sure they don't get caught out simply by not knowing.  Although it was credit reporting was traditionally used by the banks and building societies, we are now also seeing a number of utility companies reporting all or some elements of repayment histories. Some energy, water and communication companies report repayment histories to the credit reference agencies, while landlords will soon be able to report on rent payments under new plans. However, payments for council tax aren't reported by Local Authorities. It is therefore becoming more and more difficult to miss a bill and not have some impact upon your credit file. Although missing one payment may not be specifically alter your overall credit score, when it comes to applying for credit this one mistake could lead to you being rejected as banks look closely at repayment history and how you have managed your finances, and in the current climate, can use this against you.
 
"If you are missing bill payment because you don't have the spare cash, then you should speak to your supplier immediately as they may be able to help you in the short term. Not only will this help prevent further damage to your credit profile, but may also provide peace of mind."