Credit rating - how it works

Most if not all finance companies will register your loan with a credit reference agency, once you have taken the loan out. It doesn’t matter if it’s for a personal loan, hire purchase, car finance or secured loan; they are all registered on the data files and sent off.
Each month the finance company needs to send the records back to the credit reference agency and update the current status of car finance accounts they have on file. This is done electronically and usually fazed in batches over the month, if it’s a large car finance entity; monthly if it’s a smaller company.

When you fall past due, it will not show immediately that you are one month in arrears. You will have approximately three weeks before you run the risk of your credit file showing a full one payment in arrears, or as the credit reference agency states “One down”. Certainly after four weeks you will at the critical point of the account showing a level of deterioration. Obviously once it shows “one down” you will need to bring the account up to date as soon as possible otherwise your credit file will be impaired. If you’re looking to obtain things like credit for vehicle or van finance you will immediately struggle, this is because the underwriters will think that you are currently experiencing credit problems as your account has just gone one down and probably reject your car finance application.