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Unless you’re independently wealthy, chances are you will to have to purchase things on credit now and again. And, if you don’t have a good credit score, you’ll have a much tougher time getting loans for things like buying a house or a vehicle or getting a credit card.

So, it’s essential that if you want to enjoy many of the things that life has to offer, you’re going to need to have a good credit score. Traditionally, a credit score above 700 is considered good and means you’re more likely to be approved for loans and credit cards with favorable interest rates than if you had bad credit.

There are a variety of factors that go into your credit score, including:

  • Payment History
  • The Amount You Owe
  • Types of Credit (i.e. loans, credit cards, retail accounts, etc.)
  • Length of Credit History

However, of all those factors, payment history is the number one factor that affects your credit score.

In this article, we’re going to look at how late payments affect your credit score and how to improve your credit score.

Late Payments and Credit

It can’t be overstated that late payments are the number one factor to affect your credit score, and according to Equifax “If you miss a payment on one of your credit accounts, be it a credit card, mortgage, or other loans, you could see your credit score drop.”

Keep in mind that each credit reporting agency is different in how they score, but all of them take a negative view on late payments.

Now, while a late payment will ding your credit score, it’s not all gloom and doom. Credit reporting agencies look at several factors in regarding late payments, such as how late, and if you have a history of late payments. For example, if your payment is 90 days late, it will be a bigger black mark on your credit score than if you’re only 30 days late. Keep in mind that the longer your bills go without payment, the worse your score will get, so it’s vital that if you do miss a payment, you make it as soon as possible. Missing a payment by one or two days won’t hurt as much if at all.

credit repair

How Much Of A Drop Do Late Payments Cause

Again, it depends on how late the payment is, but in general, according to Credit.com “A recent late payment can cause as much as a 90-100 point drop on a FICO Score of 780 or higher.” That much of a drop is enough to pull you out of ‘good credit’ range and into ‘fair credit’ range, which then makes it more difficult for you to get credit in the future until you get that score back up.

It’s also important to keep in mind that the better your credit is, the more likely you’re going to feel the negative impact of having a late payment on your credit score.

How To Fix Late Payment Credit Scores

The first thing to do is to keep track of your credit. It’s easy to do if you have access to a smartphone. There are many apps you can get that will help you monitor your credit score and alert you when a lender makes an inquiry to your credit or if you have a rise or drop in your score. You should always know where you stand so you know where you have to go.

Once you know what your credit score is, you can begin to take steps to improve it. The most important thing is to become obsessive about making your payments on time. And one of the best ways to do this is to sign up for auto pay with your accounts. Auto pay means you authorize your lender to deduct funds from either your checking or savings account when it’s due. This is by far the best way to ensure that your payments are on time.

If you’re concerned about security or don’t feel comfortable authorizing creditors access to your accounts, you can set up reminders for each bill to tell you that it’s due and that it’s time to pay. Again, if you have access to a smartphone, there are a variety of reminder apps available that will help you keep your bills paid on time.

Another trick is to make your payments on a weekly basis. Some people find the monthly payment too much, so making smaller, weekly payments will keep you up to date and not drain your account so quickly.

It’s not uncommon for people to be late with a payment now and again, and while it will negatively affect your credit score, you can fix your credit by getting and staying on time.