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Late Payments How They Affect Your Credit

25 February 2020 No Comment

Anymore, having a credit card is as much a part of life as having a cell phone bill and car payment. Credit cards are as much or more a part of our economy as cold hard cash. They are highly convenient until you miss a payment, and your past-due bills start piling up.

So what happens if you end up with a late payment? Just how can one forgotten payment affect your credit score? Let’s find out!

What Constitutes a Late Payment?

It happens to the best of us. You’ve been consistently paying off your car or credit card. Then one month, your friend had a baby. In the rush and excitement of it all, you completely spaced your car payment and you’re hit with a late fine.

Well, what happens now?

Stated by a credit repair Austin company If you’re just a few days late, you’ll have to pay your late fine, and not much else will happen. If you have a stellar track record of on-time payments, you might be able to have your late fee remitted by your bank or loan institution.

The real kicker is when a payment is late for thirty days or more. At this point, all loan institutions will report it to the major credit bureaus.

When an institution reports a late payment, this will go directly onto your credit report and lower your credit score. A single late payment can lower your credit score as much as 100 points.

How Long is a Late Payment on your Credit Report?

Payments that go past the thirty-day late mark are added to your credit report, and your credit score will be lowered accordingly. Unfortunately, once a late payment lands on your credit report, it takes a long time to erase the damage done.

Late payments stay on your credit report for seven years from the date of the report. If you made a late payment in December of 2019, that late payment would be on your credit report from January 2020 to January 2027.

How Do I Rescue My Credit Score?

Even though your late payment is noted on your credit report for seven years, your credit score can change for the positive during those years. How?

The most important thing is to get your late payment paid off. The sooner, the better. Your credit score will be impacted less from a thirty-day late payment than a payment that is sixty or ninety days late. The longer your late payment goes unpaid, the worse off your credit score.

If you let late payments pile up, you could end up facing multiple late payments due to not being able to pay off the larger amount waiting to be paid.

The next thing:

You’ll want to do is to get back on track with on-time payments. The more consistently you pay on time, the more your credit will improve. Consistent payment is the most important factor when determining your credit score.

Finally, be aware that partial payments do not constitute a payment. Any payment less than the full required monthly amount will still count as a late payment to your loan institution.

So, as you can see paying late by 30 days or more can have a big impact on your credit score. Sometimes life gets in the way, but do your best to pay in advance if you know you’re about to hit a “busy” period or set up automatic payments through your bank. It will be a lifesaver!

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