How Paying Very Late Could Affect Your Credit Score

Failing to pay your Very account on time can have significant consequences for your credit score. Understanding the process can help you avoid long-term financial damage and protect your creditworthiness.

1. Initial Missed Payment: The process begins when you miss a payment due date. Very will typically charge a late fee and send reminders. At this stage, it is an internal matter and is not usually reported.
2. Reporting to Credit Agencies: If the account remains overdue, Very will report the missed payment to the UK's main credit reference agencies (Experian, Equifax, and TransUnion). This usually happens after you miss one or two payments.
3. Negative Mark on Your File: Once reported, the late payment appears as a negative mark on your credit file. This notation can directly lower your credit score, as it signals to potential lenders that you may be an unreliable borrower.
4. Default and Further Action: If you continue to miss payments for several months (usually 3-6), your account may be defaulted. This is a severe negative event for your credit score and the debt may be passed to a collection agency.
5. Long-Term Impact: A default or even a single late payment can remain on your credit report for up to six years. This can make it more difficult and expensive to get approved for mortgages, loans, and other credit products in the future.

How Much Will a Late Payment Affect Your Credit Score?

The exact impact of a late payment on your credit score can vary. Several key factors determine the severity of the drop.

• How late the payment is: Lenders report late payments in 30-day increments, such as 30, 60, or 90 days late. The later the payment, the more significant the negative impact on your credit score will be.
• Your current credit score: A single late payment can cause a significant drop for someone with a high credit score. Those with lower scores or previous delinquencies may see a less dramatic, but still damaging, decrease.
• How recent the delinquency is: A recent late payment will have a greater negative effect than one from several years ago. The impact of a late payment lessens over time, though it stays on your report.

How You Can Avoid Late Pay Affecting Your Credit Score

Set Up Automatic Payments

One of the most effective strategies is to automate your bill payments. By setting up autopay for recurring bills like loans and credit cards, you ensure funds are transferred on time, eliminating the risk of forgetfulness and protecting your credit from accidental late marks.

Use a Payment Calendar

Maintaining a payment calendar or using reminder apps can be a lifesaver. Visually tracking due dates helps you stay organized and manage your cash flow effectively. This simple habit ensures you are always aware of upcoming financial obligations and can plan accordingly to avoid delays.

Communicate With Lenders

If you anticipate difficulty making a payment, contact your creditor immediately. Many lenders are willing to offer a temporary hardship plan or a grace period if you communicate proactively. This can prevent a late payment from being reported to the credit bureaus entirely.

Ways to Improve Your Credit Score

Improving your credit score is entirely possible through consistent, positive financial behaviors. With the right strategies, you can boost your score and build a healthier financial profile, often seeing meaningful changes within three to six months.

• Monitor your credit reports. You can obtain free credit reports to check for inaccuracies or signs of identity theft that could be dragging down your score.
• Set up automatic bill payments. Since payment history is the most significant factor in your score, ensuring every bill is paid on time is a critical step toward improvement.
• Reduce your credit utilization ratio. Aim to keep your balance below 30% of your total available credit to show lenders you aren't overextended.
• Become an authorized user. Being added to an account with a strong payment history and low utilization can help you benefit from the primary account holder's positive credit habits.
• Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as revolving credit from cards and installment loans.
• Limit applications for new credit. Too many hard inquiries in a short period can temporarily lower your score, so only apply for new credit when necessary.

The Bottom Line

Using Very can impact your credit score. The company may perform a credit check when you open an account, and your payment history can be reported to credit reference agencies.

Frequently Asked Questions

Does opening a Very Pay account affect my credit score?

Yes, applying for a Very Pay account requires a hard credit check, which can cause a small, temporary dip in your credit score.

How do late payments to Very impact my credit file?

Very reports your payment history to credit reference agencies. Missing payments can negatively impact your credit score, making future borrowing more difficult.

Will paying off my Very balance improve my credit score?

Consistently paying your Very balance on time shows lenders you are a reliable borrower, which can help improve your credit score over time.