YIKES! A 30-Day Late Payment?!
March 15, 2022
Are you approaching a 30-day late payment? What now? What do you do when this happens? What needs to happen BEFORE it happens? Read more to find out!
5 Factors That Affect Your Credit Score
- Payment History
- Amounts Owed
- Credit History Length
- Credit Mix
- New Credit
Credit Utilization Ratio
Last month we focused on amounts owed or your credit utilization ratio. We learned that your credit utilization ratio is how much do you owe on your credit cards versus the total limits. We also learned that the limits themselves don’t matter, but how much of that limit is available to help determine your credit score. If you max your credit cards out, you’ll lose points, however, if you pay the balances down, your score will go up.
Payment History
Today, we want to focus on payment history. Do you make your payments on time? When calculating your credit score, they look at whether your payments are more than 30 days past due. If your payment is even 1 day past the 30-day mark, your credit score will be impacted. How much? We have seen people lose up to 60 points for 1 30-day late payment. What about if you are 30-days past due on 2 or more bills? Then what happens? You guessed it! You could lose up to 60 points per account. Your credit score could easily slip from 720 to 540 overnight!
So Now What?
You may be thinking, no big deal, as soon as I make a payment and bring my account current, my credit score will bounce back. Unfortunately, that is not what happens. We have seen it take as long as 12 months for someone to regain all of those lost points from 1 30-day late payment! It can also take up to 7 years, or longer, before it isn’t seen on your credit report any more.
What Should I Do?
We like to tell people that no matter what, you should do whatever it takes to make at least the minimum payment before the due date! Do not wait until that last possible day to pay your bills. Life happens and you don’t want your score to suffer because your payment got lost in the mail or you lost internet service, making you unable to make your payment on the last day. Budget if you need to, look at your bank statements to see where you could save money or cut back on spending to make sure you’re making at least the minimum payment each and every month.
Come See Us!
Our mission is to get your score above 720 and help you keep it there! What are you waiting for? Stop by to see one of our professionals today so we can review your individual credit report with you and share specific tips to get your credit score where you deserve it to be! With a stronger score, you’ll qualify for better rates that could save you money, and you may be surprised by how much!