Why Will Late Payment do to Your Credit Score?

Many people face less than desirable credit scores and struggle with the consequences each and every day. Sometime the low scores are due to filing bankruptcy or having too much debt to keep up with. Other times the low scores come from unexpected bills or a sudden loss of income. However, many low scores are at least partly caused by late or missing payments. To understand how this all connects, it is important to know how the credit score works, what your payments do to your score, and how to keep on track with your payments. You need to know what can happen to cause you to get a bad credit score.

How Your Credit Score Works

Your credit score is an important number in your financial life. Many people today do not even know what their credit score is or if they do know they have no clue what the numbers mean. Your credit score is a snapshot of your financial record in regards to your debt and payment records. The score shows lenders how responsible you are with your debt by looking at how much debt you have, what kind of debt you have, and how you are paying off that debt. If you pay on time and keep your debt managed, you are showing a good history of being responsible. Your credit score will increase as you stay on top of your payments and keep your debt under control. When you miss payments on your loans and credit cards and have debt that is out of control, your score will be lower. A credit score range of 735-700 is better than 500-550. A higher score makes it easier to get loans and financial backing because it shows lenders that you will likely pay back the money you owe them. Lower scores show there is a bigger chance you will not pay everything back or pay on time, so the lender may give you less money or higher interest fees to make sure they do not lose money… or they could just refuse to lend to you. As you can see, it is very important to understand what your credit score is and how it works.

What Payments Can do to Your Score

Your monthly payments on your debts, whether credit cards or other loans, can have possibly the biggest impact on your credit score aside from something like filing for bankruptcy. Every payment you make, or don’t make, impacts your score. You can really hurt your credit score with a late paymentbecause it makes you look irresponsible and untrustworthy. When you opened the line of credit with the card company you agreed to pay back the money you borrow on time. When you are late or miss payments, it shows you are not paying and makes you look like a risk to the lender. If your credit card payment is only 30 days late or less, there is a chance it might not get reported to the credit bureau and it may not show on your credit report. However if you hit the 60 or 90 day late mark it can severely drop your score. Also note, just because there is a chance a 30 days or less late payment will not be reported does not mean you can be perpetually 25 days late on payments. If you develop that sort of pattern there is a chance the company will report you each and every time and that can quickly sink your credit score.

Tips for Remembering Payments

If you have trouble remembering when payments are due here are some easy tips that can help:

• Have a calendar that is used just for listing when all bills are due.
• Put alerts on your smart phone or tablet to remind you a few days before they are due.
• Set up a standard day for each bill- one credit card is always the 5th the other is the 26th and so on.

These are simple steps but they can really help you stay on top of your bills and help you keep your credit score as high as possible.

It is obvious there are many ways you can help or hurt your credit score. It is in your best interest to pay your debt and loan payments on time every time; it will help boost your credit score and will make it easier for you down the road. It can be difficult to get a mortgage with bad credit and other lines of credit may be difficult to secure as well. So protect your score and avoid late or missed payments whenever you can.

Joy Mali is an active blogger who is fond of writing articles on Bad Credit Loans and advising people to get mortgage even with bad credit. Follow her on Twitter to know more on What Will Late Payment do to Your Credit Score.