New research reveals that 1.2 million Millennials (18-34) have ignored a payment such as the last month of a phone contract or a household bill. Nearly a third (31%) of this age group has been rejected for a financial product such as a mortgage or store card because they have defaulted on a repayment.
This is despite the average outstanding amount being less than £8. Defaulting on any payment – big or small – can cause difficulties in the future because of the negative impact it has on someone’s credit score.
Phone contracts are the most readily ignored bills. 16% of young people admit to ignoring the last payment of a contract, this figure is three times higher than the proportion of older people who admitted they had done this.
A lack of knowledge could be the route of the issue: 62% of the UK population don’t feel informed about the repercussions of missing a payment and this number rises to 70% amongst the Millennial generation. The most common reason people gave for missing a payment was that they already thought the final payment had been paid (27%) but almost a quarter thought it didn’t matter.
CEO and founder Justin Basini comments, “Missing a minor payment may seem harmless at the time, but it can come back to haunt you.
The consequences of defaulting on a payment – even it’s just a small amount – can be huge. A lender will take into account the information in your credit report before giving you a mortgage or a credit card. This isn’t just about how much you owe or earn, but more importantly how you have managed your credit in the past.
Unless it’s a bank or credit card firm, organisations aren’t legally required to let you know you’re about to default on a payment. The onus is therefore on us to keep track of what we owe to whom. If you’re not sure whether there could be an unpaid bill lingering, arm yourself against the disproportionate punishment of being rejected for credit by checking your credit report online for free.”
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