Banks like it when you skip an occasional payment, and they can charge you interest and late fees. But they also want to be paid back. Too many missed payments is a red flag.
"Banks are constantly trying to perfect the method of who's going to repay and who's not," said Feddis.
On the one hand, banks want customers to make payments on their loans. But on the other, they can't collect late fees from customers who always pay on time. So the customer who typically makes on-time payments but slips up once in a while is the ideal target.
"If you miss one or two payments but don't look like you're getting close to defaulting, they like that," said Papadimitriou. "But they have to be careful, because some might actually continue not making payments and then default."
