What happens first when a payment is missed
When a payment date passes without enough money being collected, the lender will normally try to contact you. This may be by app notification, email, letter or phone. The agreement you signed sets out the payment date, the amount due and any charges that can be added. Under the Consumer Credit Act 1974 and FCA rules in CONC, the lender must give you clear information before you sign, including the cost of credit, and must treat you fairly if you fall behind.
A single missed payment is not usually the end of the process. The lender may simply ask you to bring the account up to date. If the missed payment is a one-off, contact the lender as soon as possible. Many issues are easier to resolve before the account falls further behind. Check your agreement or online account to see the next due date and whether a late fee applies. If you cannot find the information, ask the lender for a statement or a copy of the agreement under the rights set out in the Consumer Credit Act 1974 section 77.
Immediate consequences: fees, contact and your credit file
Missing a payment does not automatically mean the loan is in default, but it can have immediate effects. The table below summarises the common consequences and what they depend on.
| Consequence | What it depends on | What you can do |
|---|---|---|
| Late or missed payment fee | Terms of your credit agreement and FCA fairness rules | Check the agreement, ask for a breakdown, and query anything unclear |
| Contact from lender | Lender's collections process | Respond, explain the situation, and keep a record |
| Credit file mark | Whether the lender reports to credit reference agencies | Check your statutory credit report and ask for corrections if wrong |
| Arrears balance | How many payments are missed | Pay what you can and ask about a temporary arrangement |
Credit reference agencies can record missed payments, and this can affect future applications. You can check what is recorded by requesting your statutory report from a credit reference agency. The Information Commissioner's Office credit guidance explains your rights over credit information. FCA rules require lenders to treat customers in arrears fairly and to consider appropriate forbearance, such as accepting reduced payments for a period. The FCA consumer pages explain how regulated firms should deal with payment difficulties.
How lenders should treat you when you miss payments
FCA rules in CONC set standards for credit firms, including how they should handle arrears and default. A lender should not ignore your situation or use aggressive debt collection. It should assess your circumstances, communicate clearly, and give you time to respond. The Consumer Credit Act 1974 also gives borrowers legal protections, including rules on information requests, early settlement and unfair credit relationships. If you ask for a copy of your agreement or a statement of account under section 77, the lender generally must provide it.
These protections do not erase the debt, but they matter if you need to challenge unfair treatment or understand what you owe. A lender may also be required to follow forbearance rules before escalating. Keep copies of everything you send and receive. If a lender refuses to explain charges or continues to contact you in a way that feels unreasonable, you can use the lender's complaints process and, if needed, the Financial Ombudsman Service.
What to do in the first 48 hours
Act early. The sooner you speak to the lender, the more options are usually available.
- Check what is actually due. Look at your agreement, statement or online account so you know the missed amount, due date and any charges.
- Contact the lender before it contacts you. Explain why the payment was missed and ask what temporary options exist.
- Ask for a payment arrangement in writing. Confirm any new date, amount or freeze on charges so there is no confusion.
- Make a realistic budget. Use a free budgeting tool or debt advice service to work out what you can maintain.
- Keep a record. Note dates, names and what was agreed. This helps if you need to complain later.
If you cannot afford the full payment, do not simply ignore the problem. A lender may be more willing to agree to a lower payment or a short pause than to chase an unresponsive account. You can also use our loan payment calculator to see how different payments affect the balance. If the problem is wider than one loan, our guide to debt consolidation loans explains when combining debts may or may not help.
Defaults, default notices and legal escalation
A missed payment is not the same as a default. A default usually happens after a longer period of missed payments or a serious breach of the agreement. If the lender decides to treat the account as defaulted, it must follow the agreement and relevant law. Where the Consumer Credit Act 1974 applies, a default notice may be required before the lender can demand early repayment or take certain enforcement action. The notice gives you a chance to put things right within a specified period.
If you receive a default notice, read it carefully and seek advice immediately. Do not ignore court papers or formal notices. Free debt advice services can help you understand the options, including debt management, individual voluntary arrangements or insolvency where appropriate. The government's debt advice page points to free services. Our page on FCA regulation and your rights covers the wider framework.
How missed payments affect your credit file and future borrowing
Lenders share payment information with credit reference agencies. A missed payment can stay on your credit file for several years, although its impact reduces over time. It may make future lenders see you as a higher risk. This can affect whether you are accepted and the interest rate you are offered. You have the right to see your statutory credit report from each credit reference agency. Check it for errors and ask the agency to correct anything that is wrong.
If you are struggling, adding more credit can make things worse. Our guide to checking your credit file explains the basics. The ICO credit guidance sets out how credit information should be used. If you are unsure whether a missed payment is recorded correctly, ask the lender and the credit reference agency for details.
When to get free debt advice and how to complain
If missed payments are becoming a pattern, get free, independent debt advice. StepChange, National Debtline, Citizens Advice and MoneyHelper offer free guidance. They can help you prioritise essential bills, deal with creditors and choose a debt solution. You can find government guidance on debt advice. Do not pay for debt advice before checking free services.
If you believe a lender has treated you unfairly, complain to the lender first. If you are unhappy with the final response, you may be able to take the complaint to the Financial Ombudsman Service. The FOS is free for consumers and can look at how the lender handled your arrears. Our guide to complaining to the Financial Ombudsman explains the process.
How to reduce the chance of missing a payment
Prevention is mostly about matching the loan to your budget. Before borrowing, check the total cost of credit, not just the monthly payment. Use the affordability guide to understand what lenders look for. Set a reminder or direct debit for a date just after you are paid. Keep a small buffer in your account for unexpected bills. If your income changes, contact the lender before the payment fails.
You can also ask about early repayment if you want to clear the balance sooner, but check whether the agreement allows it without charge. A realistic budget is more useful than optimism. If you already have arrears, prioritise essentials such as housing, energy, food and council tax, and speak to a free adviser about the rest.