A late payment can have a considerable impact on your creditworthiness. It can significantly lower your credit score and affect your financial standing. Your credit score shows your ability to repay loans, depending on your credit history. Credit card companies and lenders use this score assess your credibility when you apply for a new card or loan.
In this blog, we are going to discuss the effect of late payment on credit score. So, let’s dive in.
Affect of Late Payment on Credit Score
Once a payment is considered overdue, the lender you owe money to can flag your credit report with a late payment. This will negatively impact your credit score that lenders use when deciding if they should offer your credit.
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7-Day Late Payment
Less than 30 Days Late
30-Days Delay
60-Days Delay
90-Days Delay
More than 120 Days Delay
A 7-day late payment does not impact your credit score much. In certain cases, it might not even be reported to the credit bureau. But you should know that making constant late payments can bring down your credit score over time.
After being 30 days late, even a single day can lead to a late payment credit score drop. For instance, even a single payment that is 15 days late can lower your credit score by 50 to 100 points, depending on your overall credit history.
A 30 day late payment credit score impact means a drop of 90-110 points in credit score. This highlights how important it is to make payments on time to protect your credit score from damage.
After a delay of 60 days, creditors generally report the delinquency to credit bureaus. At this stage, the 60 day late payment credit score drop becomes more significant. It can cause your credit score to drop by 130 to 150 points.
A 90 day late payment effect on credit is serious. It can seriously affect your credit score and may even result in legal action against the borrower. The impact is not only severe but can also remain on your credit report for a long time.
Late payments, which extend beyond 120-days can have long-term consequences. They not only harm your credit score but also make it challenging to obtain loans in the future. Know that the consequences can vary based on the circumstances of the individual and the policy of the lender.
How to Avoid Late Payments?
There are several steps you can take to avoid late payments and maintain a good credit score.
- You can automate your bill payments. This helps you meet your obligations on time and reduces the risk of forgetting a payment.
- Use smartphone apps or calendars to set reminders for payment due dates. It will ensure that you do not miss out on the payments.
- Maintaining an emergency fund allows you to handle unexpected expenses and bills. This lowers the risk of missing payments during financially difficult times.
Hiring a Professional Credit Repair Service
Other than following the steps given above, you can hire the best credit repair service in Miami. They disputes inaccuracies or errors on your credit reports and initiate dispute with credit bureaus to have them removed or corrected. Also, they can negotiate with creditors on your behalf to remove negative items from credit reports.
If you need credit counselling services to help individuals understand your credit reports, you can search for nonprofit credit counselling near me.
