How Late Payments Affect Credit Score
What to Do When You’ve Missed a Payment
A single late payment is not the end of the world, especially if caught and corrected within 30 days. Typically, your creditor will require you to fill-out an accidental late payment waiver when this happens. As soon as this becomes a regular occurrence, however, the process gets a bit more complicated. Several late or missed payments can snowball into a disastrous situation such as a charge-off or collection.
When a payment extends its due date, four things generally happen:
(1) A late fee of $15-35 is charged to the next billing statement. Additional fees appear each month following should the debt remain unsettled.
(2) After 60 days, the creditor may penalize your delinquency by increasing your interest rate. Thankfully, you may resume your previous rates after several months of timely payments.
(3) A late or missed payment entry may appear on your credit report for up to seven years once the credit bureaus have been notified.
(4) Since payment history accounts for 35% of a credit report, negative entries may reduce the overall score. Believe it or not, one missed payment can drastically affect an individual’s score who has been otherwise responsible for his/her debt.
Unfortunately, once the four consequences above come into effect, it’s very hard to reverse the damage. Often, it’s a matter of paying your accounts on time and rebuilding your credibility. Sometimes, contacting your creditor’s customer service line can result in forgiven or removed late payment entries. In such instances, ensure that this never happens again!
Such blunders can hurt your ability to obtain secured loans. If you’re on the market for a vehicle but your credit score prevents you from finding an auto loan, swing by Trillium Auto Group. While taking care of your transportation needs, Trillium Auto Group also helps to re-establish your credit. Unlike many other automobile sales companies, Trillium Auto Group offers credit counselling services, meaning you drive away worry free every time.