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.
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.”