Will 30 Days Late Payment Affect Your Credit Score?

Do you know the fact that you could definitely hurt your credit score if you pay your accounts late? It is very important for you to keep in mind that your payment history to your accounts or loans carries the largest weight on your credit score, i.e. 35% of your credit score.

Besides, the late payment effects on your credit score are lasting for seven years! 7 years? Yes, it is true! All the bad past due payments will remain on your report for seven years. In other words, one late payment today may stay on your credit report for such a long period.

Now, let’s take a closer look on how the past due is being judged and its effects on your credit score.

If you used to pay your bills a few days late, this will not have much effect on your credit rating and the activity will not be stated on your credit report. The only issue you need to face is you are required by your lenders or creditors to pay additional late charges or penalty. Some of the lenders may increase your interest rates or refuse to upgrade your accounts if you always do that.

On the other hand, any debt that is over 30 days late is considered late payment. In general, late payments are judged based on:

• How frequent do you make your payment late? If you pay late too frequently, your credit score is going to be reduced.
• How recent was your last late payment? In common, your credit score puts a larger weight on anything more recent. Your credit score will be affected a lot if you always make late payment in recent years. Many people’s credit scores are spoilt during the global financial crisis last year.
• How long do you always drag to make payment? Do you drag your payment for 30 days, 60 days, 90 days or 120 days before making payment? The longer period you take, the larger the negative effect on your credit score.

Once your payment gets over 30 days late, it will be reported to the three major credit bureaus (Experian, TransUnion and Equifax). Consequently, a negative mark will be placed on your credit report and around 50-75 points will be deducted from your credit score. Your score will drop further if you extend your payment up to 60 days and above.

In conclusion, making late payment will definitely kill your credit score. Without a good score, it will be hard for you to obtain loans at lower interest rate with better terms. If you are working hard to rebuild your credit and to dispute any late payments on your credit report, there is no better way but to PAY ON TIME.