Better late than never, they say. They also say nothing is to be taken too literally…and your Credit Score can vouch for that!

Schedules, timelines, and routines are a part of our everyday. We have all learnt to work out a system to keep up, so we don’t drown in unpaid bills, missed meetings, and wasted time. Well, in other news, ‘to err is human’. We all do it. The key to keeping the damage to a minimum is to always prioritise the impact of the after-effect. The larger the impact, the lesser the room for error. Enter, ‘timely payments to maintain a healthy credit report’. 

A late payment can have a ripple effect of staying on your credit reports for up to seven years. We bet that just jolted you. But, yes, it’s true. It can impact your Credit Score during the entire period it’s there. 

What will late payments do to my credit report? 

Keep your eyes on the prize. In this case, it is your Credit Score. The higher the Credit Score, the easier it is to get a loan, or financial aid in the future. You have a 30-day window to repay a late bill before it appears on your credit report.  

To bring in a little more detail: 

• Payments made within 30 days: If you miss your due date but make a payment before 30 days, it can soften the blow. Creditors do not report a late payment to the credit bureaus; however, you may still incur a late fee.  
• Payments made 30 days or after:  Once a late payment is 30 days overdue, it will appear on your credit report.  
• Payments made 60 days or later: Failure to make the late payment or missing your next due date will cause a 60-day late notice to be issued. This can hurt your Credit Score further. If payments continue to be missed, more notices will show on your credit report, and your debt amount may be sent to a collection agency where a creditor will most likely close the account.

How can a late payment affect credit history? 

For every action, there is an equal and opposite reaction. This opposite reaction is not kidding around – it means business! The way the Credit Score is set up, a late payment will lead to a more severe point drop for an excellent Credit Score than a poor or fair score. To be clearer: 

• Missing multiple payments in a row can be worse for your credit than missing one payment. 
• Having late payments on multiple accounts can be worse than a late payment on a single account. 
• The negative impact of late payments on your credit decreases over time. 

Actively working to improve your credit could also help you recover from previous late payments. For example, making your payments on time and lowering your credit utilisation ratio, or the amount of available credit you’re using, can show future creditors that you’re able to manage and repay loans. 

Additional Reading: How Late Payments Can Leave You Credit Sore! 

Be one step ahead  

Eliminate worry by planning instead! Here are some ideas that might help you in staying ahead of the game: 

• Use Autopay – Let technology bear the burden through autopay payments. If you have an active account, you can always use it to make your payments on time without having to worry about missing the due date. 
• Alarms are the way to go – If you choose to opt out of autopay, you can always set a due date reminder or a reminder that goes off a few days earlier to help prepare you for the payment approaching. Our BankBazaar mobile app can also help with these reminders – download from your Play Store or iOS App Store, today
• Change your due date – It’s just that simple. If you would prefer to have the pay-out closer to when you get paid or a date you think convenient, jump on it hassle-free with your creditor! Anything is better than having that sinking feeling of missing a payment.

Removing late payments 

If you can overcome a hurdle, it means it’s in the past, with the future looking that much brighter. The 7-year itch is a long time when it comes to the relationship between late payment and your credit report. On the other hand, if a late payment has been incorrectly added to your credit report, you can file a dispute for free by mail, over the phone or online, to explain the late-payment error. You can also send, attach or upload supporting documents, such as bank statements or cancelled checks showing when you paid the creditor.

After investigation of your claim, your credit report will be changed to reflect the right information in case of error

What can a good Credit Score do for me? 

• Low Interest Rates – Interest rates are directly tied to your Credit Score. If you have a good credit score, you’ll almost always qualify for the best interest rates, with lower finance charges on Credit Card balances and loans. 
• Better Chance for Credit Card and Loan Approval – Poor credit history can make it harder to apply for a new Credit Card or loan. Having an excellent Credit Score doesn’t guarantee approval, however, a good Credit Score increases your chances of being approved for new credit. In other words, you can apply for a loan or Credit Card with confidence
• Bragging Rights – A spotless credit history has benefits, benefits, benefits. Plus, it gives you bragging rights and something additional to be proud of, especially if you’ve had to work hard to take your Credit Score from bad to good.  

Additional Reading: What To Do If You Can’t Pay Your Credit Card Bill 

In a world where you can benefit from credit, reliable sources can show you the best way to map out your journey. Platforms like BankBazaar have the expertise and the industry knowledge to hand-hold you and ensure your financial safety.