Missing your due date and making a late payment is not the end of the world for your credit scores. But, it is something to be avoided as it does negatively affect your scores. Payment history is a factor that’s considered when banks and issuers evaluate your credit risk. A long history of on-time payments suggests that you’re a responsible and reliable borrower. If you have a history of late and missed payments, you’ll likely need some credit repair help. We can help with that. The first step is understanding why paying on time is so important.
What Are the Effects of Late Payments?
- Lowered Credit Score – Payment history accounts for 35% of your credit score. It’s one of the most important factors in calculating your credit score. One late payment can significantly lower your credit score. In fact, just one late payment can lower your scores anywhere from 60-100 points or more; especially if your score was very high to excellent.
- Late Fees – Paying your credit card bill one day after the due date can result in a late fee. These fees are usually in the range of $25-$35, and you’ll see them reflected on your next billing statement.
- Rise in Interest Rates – Being late on a payment can reset your promotional interest rate. Some cards have a penalty APR as high as 29.99%. The result is you’ll end up paying significantly more in interest on your outstanding balance. Late payments can also forfeit your zero percent rate on balance transfers.
- Credit Report – If your payment is more than 30 days late the three major credit bureaus are usually notified. If the happens, the late payment will show up on your credit reports. A late payment that’s on your credit report can stay there for seven years from the date of the delinquency.
What You Can Do if You’ve Missed Your Payment Date
If your late, MAKE THE PAYMENT AS SOON AS POSSIBLE. The longer it goes unpaid, the more it can have a negative impact on your credit scores. If you have a solid payment history of paying on time and you are in good standing with your bank; you may request that the late fee be forgiven and removed. It’s not guaranteed, but sometimes they will.
It’s important to have a budget to make sure you are making your payments on time. If you’re busy and forgetful; consider setting up auto-pay on your credit cards, so you know you’ll always pay on time. You can adjust how much you want to pay and make bigger payments when you’re able.
If you’re struggling to get back on track with your finances and credit, we can help. There’s a lot of strategies and techniques that can build and repair your credit fast. Give us a call today, and we’d be happy to answer any question you have. 1 (887) 772-7312