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From Adviser Guide: Short-term finance

Q: Do missed payments affect credit rating?

In certain circumstances the borrower’s credit rating can be hit by failure to pay off a short-term loan.

By Emma Ann Hughes | Published Jun 28, 2012 | comments

If a bridging loan goes into default a customer’s credit rating will be affected if their lender is a contributor to a Credit Reference Agency, according to Alan Margolis, head of bridging at United Trust Bank.

If the client does not pay-off a personal asset loan, Paul Aitken, chief executive of Borro, said their credit rating is not affected and there will be no bad debt.

Mr Aitken said: “As the loan is secured against the asset, should there be a surplus if the asset goes to sale; the surplus goes back to the client.

“Should there be a deficit, if would be our responsibility.”

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