Payments Tab
The Payments subtab provides an overview of an applicant's payment history. Data is sourced from the Share database at TransUnion.
This information helps a Loan Officer assess the applicant's repayment behaviour. Previous repayment history is critical to evaluating the likelihood that an applicant will repay a loan next time.
Key Information
Above the Defaults and Missed Payments Active and Paid table, the Total Balances on all accounts is shown. Below this is displayed:
The count of defaults: The number of accounts in default.
The number of accounts where there has been a missed payment.
Total number of active accounts that remain open.
The count of paid accounts that have been fully repaid and closed.
All data is retained for six years from the date of the last payment made.
To view the relevant table, click on the number or section in the count graphic. The Defaults Table is displayed first. To view the Active Accounts Table, click on the "Active Accounts" section in the graphic (e.g., "3 active"). This will load the table showing the active accounts, allowing you to assess the relevant data for each category.
Navigating to the different tables
To navigate to the different tables click on their corresponding value in the total count graphic. As demonstrated below:
Default Table
The Default Table provides details on accounts where the creditor has recorded a default. Defaults are recorded when the:
Account has at least six consecutive months’ missed payments. In cases where the loan agreement is for three years or less, a default might be recorded after three months’ missed payments.
Relationship between the creditor and debtor has broken down and it is clear that payments will no longer be made according to the original agreement.
Account is passed to a debt collector.
Applicant enters a form of insolvency or a Debt Management Plan.
Defaults under the Consumer Credit Act can only be registered after a Default Notice has been issued. Once registered, a default cannot be reserved. So, if a debtor were to catch up on payments, the default would remain on file, but the balance should reduce. Note: credit union loan agreements are not governed by the Consumer Credit Act.
For more detailed guidance on how defaults are assessed, refer to the Defaults Article.
For each account, you will see:
Default Date: When the account was officially flagged as being in default by the creditor.
Balance at Default: The amount owed at the time the default was registered.
Current Balance: The remaining balance on the account, which could be different from the default balance due to repayments or adjustments.
Note: When a borrower pays down a default, this is not always recorded. For example, a debt collection agency might not be able to update the credit file.
Satisfied Date: If the defaulted account has been repaid (either fully or partially), the "satisfied" date will appear in orange. This is a positive indicator, as it shows that the applicant made an effort to repay the debt, although it may have been through a full and final settlement arrangement.
Defaults rules are triggered based on the balance at the time of default. For example, if an account defaulted with a £1,000 balance and was later repaid partially, the default balance to trigger a decline or refer rule is £1,000.
Missed Payment Table
The Missed Payments Table tracks instances where payments were missed but not yet considered defaults. Sometimes missed payments are referred to as delinquent accounts. A missed payment is the first sign that the applicant may be struggling with their finances. This table is especially useful when evaluating an applicant’s ability to keep on top of payments or catch up on arrears, before the account is defaulted.
Early Delinquency: Refers to one or two missed payments. These are not yet serious but suggest potential repayment difficulty.
Sustained Delinquency: Refers to three or more missed payments, indicating more significant arrears that may require closer scrutiny.
The table provides the following columns:
Date: The date the account first became delinquent due to a missed payment.
Account type: Hovering over the account type initials reveals additional details about the account.
Delinquent Balance: The balance at the time the payment was missed.
Balance: The current balance of the account, which may have changed due to payments or added interest.
Missed: The number of consecutive payments that have been missed.
Regular payment: The amount the applicant should be paying towards this debt each month.
Status: This describes the current condition of the account, such as AR for Arrangement to Pay or BB for Sustained Delinquency.
If a missed payment is rectified (e.g., through an arrangement), it can improve the applicant's status and may be viewed more favourably. On the other hand, if the missed payments are worsening, it could be an indication of financial strain, which may impact the lending decision.
For further details on missed payments and how they are categorised, refer to the Missed Payments Article.
Understanding Payment Statuses
The Payment Statuses table categorises payment behaviour, helping you assess an applicant’s history and predict their future performance. Key statuses include:
BB: Sustained delinquency, indicating multiple missed payments.
AR: An arrangement to repay, which shows the applicant has worked out a plan to address missed payments.
OK: The account is back on track with no missed payments.
QY: Account query. The applicant has contacted the creditor to question the balance or repayment value.
An understanding of these statuses allows a Loan Officer to make informed decisions. The tables help with assessing whether an applicant is making efforts to resolve their financial difficulties or whether their situation is worsening.
Active and Paid Accounts
The Active and Paid Accounts section provides an overview of the applicant’s ongoing financial obligations and accounts that have been fully repaid. This section helps you assess the applicant’s current financial standing.
Active Accounts: These are accounts that remain open or have an outstanding balance. Active accounts are shown in amber to indicate that they are not yet fully paid.
Paid Accounts: These accounts have been cleared, and there are no outstanding payments. Paid accounts are shown in green, indicating they have been fully settled.
Each account will show:
Current Balance: The balance that remains on the account (for active accounts).
Regular Payment: The amount due for payment (except for credit cards, where the payment amount varies based on the outstanding balance).
The total balance and total monthly payments for active accounts are also displayed at the bottom of the table.
Conclusion
The Payments section of the Credit tab is an essential tool for assessing an applicant’s ability to maintain their credit payments. By reviewing the worst payment status, defaults, missed payments, and active accounts, it is possible to gain a deeper understanding of the applicant’s repayment history and their ability to manage their financial obligations. This insight helps you make fair and informed lending decisions, reducing the risk of defaults and improving loan performance.
For a more detailed look at how specific payment behaviours impact lending decisions, refer to the articles on Missed Payments and Defaults.