How Do Late Payments Affect Your Credit?

If the inner workings of your credit score are a mystery to you, you’re not alone. Most people simply aren’t sure how their credit scores are calculated. The formula is surprisingly complex and difficult to understand for something that is such a vital part of your financial wellbeing. If you’re a credit union member, the team there can answer many of the questions you have about your credit score, but one query comes up frequently: How do late payments harm your credit score? There is no easy answer, but there are some general facts that will help you better determine just how much a late payment will harm your score.

When is a payment considered to be late?

The good news is that if you remember you forgot to pay a bill a few days after the due date, your credit is unlikely to be impacted at all. Creditors can begin reporting late payments to credit bureaus when the payment is 30 days late. Creditors will report a payment and specify how late it is. For example, a creditor may decide to report your account to a credit bureau when it is 60 days late, and specify it as such. Late payments can be reported multiple times as the debt gets older, up to 150 days late, at which point it may be reported as charged off.

How much can a late payment impact a score?

There is no set rule for how much a late payment will impact your score. How late your payment is, how often you have paid late, and how long it has been since the late payment was reported will factor into how it influences your score. Generally, the higher your credit score is, the more a late payment will affect it. In some cases, a single late payment could reduce your score by 110 points, if your credit score is high. If your score is lower, the impact may be 80 points or less.

Managing your credit score is hard, but at GCS Credit Union, our team is here to support you as make smart decisions to on the path toward your financial goals. Talk to a credit union representative in O’Fallon today by calling (618) 797-7993 for more information.

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