How to Repair Credit after a Missed Car Payment

How to Repair Credit after a Missed Car Payment

Posted on August 10, 2021

It is safe to assume that any missed loan payment can have a serious impact on your credit score. Even though it isn’t always the case, if you have that in mind, you’re less likely to miss one. What happens if you do miss an auto loan payment? How can you repair credit after a missed car payment? Our Ayr auto loans team explains.

Missing an auto loan payment in Ayr

If you do miss an auto loan payment, the first you’ll hear of it is when you get an email, letter or call from the lender. If you have a lot going on, you may not even notice you missed it.

The important thing to do to repair credit after a missed car payment is make that payment as quickly as possible. If you can pay within 28 days, the lender may not add a missed payment note on your credit report and your credit score may not be impacted at all.

We say may, because different lenders view missed payments in different ways.

If it’s the first time you missed a payment, you’re more likely to get a pass if you pay right away. If it isn’t the first time you missed a payment, the lender may take more action.

If you think you’re at risk of missing a payment, ask your lender for a deferral or payment holiday.

Rebuilding credit after a missed auto loan payment

If you do miss an auto loan payment and it is recorded on your credit report, your score is going to take a hit.

How much of a hit depends on your score and what else you have making entries on your report. If your auto loan is the only payment making up your payment history, the impact is going to be severe.

If you have more payments contributing to your payment history, it will have slightly less of an impact.

To rebuild:

Set up automatic payments – Set up automatic payments for every outgoing that supports them. They are the easiest way to manage your outgoings and avoiding a missed payment.

Use your credit card – If you have a credit card, start using it for gas, groceries and daily expenses. Make sure you have minimum payments set up. Aim to pay off the balance each month but make sure the minimum payment goes through first to help boost your payment history.

Start using a budget – It if was financial trouble that caused the missed payment, create a household budget and list all income, outgoings and debts. Use it to create the most accurate picture possible of your situation.

Make savings where you can – A budget not only helps you see where your money goes, it also helps you identify where you can make savings. If you’re ending each month in the red, a budget should help you see where you can cut back and balance the books.

Refinance the auto loan – Depending on your situation, you can also refinance the loan for a lower amount, longer term, consolidate other debts or pay it off completely.

Missing an auto loan payment isn’t something we would recommend but it isn’t terminal. With swift action and a few changes, you can make the payment, potentially avoid a hit to your credit score and make beneficial changes to spending.

Contact Unique Chrysler for help, advice and competitive Ayr car finance and leasing.

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