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Loans Not Repaid Purposely

Written By On 26/04/2013

Experian have carried out a survey on over three thousand people and if these results reflect the rest of the UK, it means that around one in five has intentionally not paid a loan instalment when it was due.

The credit reference agency's questions related to people borrowing a different assortment of loans since 2007. They included overdrafts, personal borrowing and credit cards. It showed that since then, nineteen per cent of them admitted they had made a conscious decision not to pay because they could not afford to.

Experian believe that people need to "understand the impact of these actions on long term creditworthiness" if a payment is missed on any type of loan. The likelihood is that it will affect their credit ratings, which will also make their chances of being accepted for any other loan slimmer.

Fourteen per cent of the three thousand plus researched said they will only try to repay the minimum required each month on their credit or store cards. This in turn will mean they accrue lots of extra interest charges without ever reducing the amount borrowed. Likewise, even that may affect their borrowing ability when lenders consider any future loan requests.

Experian managing director, Peter Turner commented,

Even the most common credit services like an overdraft can have significant consequences if poorly managed over an extended period of time.

What causes extra concern is the survey suggests that this particular problem is worsening. Almost fifty per cent of the ones that admitted to missing payments were all within the last twelve months.

It is important for people to be aware that if a loan repayment is missed, then this will be recorded and will stay on their record for six years. After that time it is then taken away.