Question by Tim: What exactly is a default on your credit rating?
Do most lenders warn or tell you if they give you a default?
Who has the authority to do so?
Can you get a default for one late payment on a loan or credit card?
Answer by Matthew Stewart
A default means that you did not pay according to the agreed upon terms. The lender can repossess any merchandise used as collateral for a loan (house, car, etc.) Usually, the debt was charged off as bad debt, meaning that they never expect you to actually ever pay them back because you were such a lousy payer.
By opening the account with the lender, you have given the lender the authority to report the staus of that account to the credit bureaus. If you do not pay well, they are authorized to report that.
When you get a credit card or a loan, the terms are given to you in black and white. If you do not pay according to the terms, the lender is allowed to report that you did not pay as agreed. It is up to the lender when and if the account goes into a default status.
While it is rare to get a default after one late payment, if the lender chose to do so, they could put the loan in default status. You are under contract with the lender. You are required to keep up your end of the contract. If you do not pay as agreed on your contract, the lender does not have to give you a second chance and does not have to work with you to get late payments caught up.
Most lenders will allow 2-3 missed payments before putting the loan in default and will make attempts to contact you before they change the status of your loan.
However, while it is very rare for a lender to put the loan into default status after only one late paymnet, it is perfectly within the rights of the lender.
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