How many times have you made late payments of your outstanding debts? Well, this is a question that you would have hardly thoughtof unless you found that your credit scores have got affected badly. When you make late payments, then this hurts your credit score. According to FICO, if you make one late payment of 30-days, then this will lessen your FICO credit score by at least 110 points. You’ll have to get in touch with the creditor or give a proof that it is a mistake in order to remove the late payment from your credit report. In case this happens, then it will not have any effect on your credit score.
How late payments affect your credit score
The banks and the lending institutions consider payment history to be an indication of risk when they decide if they’ll approve credit to you. If your payment history is good and you make timely disbursment, then this means you are a responsible borrower. However, if your payment history is bad, then this means that you did not pay off your outstanding debts at the right time. This has led to a drop in your credit score. Read on to know how late payments can affect your credit score.
· Late fee will be charged - If you have credit card bills and you make the payments even by a single day late, then you will be charged with a late fee on that. This late fee may be nearly $35 high and this may appear on your future bill statement. However, if you keep on missing the due date too often, then you’ll have to pay extra late fees on it.
· Late payment will appear on credit report - When you make late payments by more than 30 days, then the three credit reporting bureaus – Experian, Equifax and Transunion will be informed about it. The late payment will appear on your credit report and this will be staying on your report for at least 7 years.
· Rate of interest may increase - When you make late payments to your creditors, then you may be charged with a high rate of interest on your dues. This often resets your rate to penalty annual percentage rate or APR. Well, you need to know the penalty APR may be nearly 29.99%, in case of plastic money. This means you will be paying more in terms of rate of interest on your outstanding dues. In case, you’re having 0% APR on a balance transfer card, then making late payment may forfeit 0% APR and change it to default rate.
· Late payment will hurt credit score
- You must be aware about the fact that the payment history consists of almost 35% of credit score. As such, this is one of the main factors involved when credit score is calculated. If you make one late payment, then this may decrease your credit score by many points, particularly when you really have a good score. The late payments can have an affect on your credit score greatly based on how often you pay late, how delayed your payments are and what your present credit score is.
When you make late payments frequently, then this will damage your credit score severely. As such, you need to settle your due debts and try to make timely payments. This way, you can avoid hurting your credit score and in turn, preserve a good score.
Author-bio: This article has been put up by Adrian Collins, a resident of Berkeleys, US. He is an experienced financial article writer. Adrian likes to cover the topics like debt settlement, analyzing debt income ratio, credit card pay off, debt reduction,He is also associated with a debt consolidation community in US.
How late payments affect your credit score
The banks and the lending institutions consider payment history to be an indication of risk when they decide if they’ll approve credit to you. If your payment history is good and you make timely disbursment, then this means you are a responsible borrower. However, if your payment history is bad, then this means that you did not pay off your outstanding debts at the right time. This has led to a drop in your credit score. Read on to know how late payments can affect your credit score.
· Late fee will be charged - If you have credit card bills and you make the payments even by a single day late, then you will be charged with a late fee on that. This late fee may be nearly $35 high and this may appear on your future bill statement. However, if you keep on missing the due date too often, then you’ll have to pay extra late fees on it.
· Late payment will appear on credit report - When you make late payments by more than 30 days, then the three credit reporting bureaus – Experian, Equifax and Transunion will be informed about it. The late payment will appear on your credit report and this will be staying on your report for at least 7 years.
· Rate of interest may increase - When you make late payments to your creditors, then you may be charged with a high rate of interest on your dues. This often resets your rate to penalty annual percentage rate or APR. Well, you need to know the penalty APR may be nearly 29.99%, in case of plastic money. This means you will be paying more in terms of rate of interest on your outstanding dues. In case, you’re having 0% APR on a balance transfer card, then making late payment may forfeit 0% APR and change it to default rate.
· Late payment will hurt credit score
- You must be aware about the fact that the payment history consists of almost 35% of credit score. As such, this is one of the main factors involved when credit score is calculated. If you make one late payment, then this may decrease your credit score by many points, particularly when you really have a good score. The late payments can have an affect on your credit score greatly based on how often you pay late, how delayed your payments are and what your present credit score is.
When you make late payments frequently, then this will damage your credit score severely. As such, you need to settle your due debts and try to make timely payments. This way, you can avoid hurting your credit score and in turn, preserve a good score.
Author-bio: This article has been put up by Adrian Collins, a resident of Berkeleys, US. He is an experienced financial article writer. Adrian likes to cover the topics like debt settlement, analyzing debt income ratio, credit card pay off, debt reduction,He is also associated with a debt consolidation community in US.
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