Building credit can take a lot of time and work, but it also requires you to be quite organized with your money and credit card payments. If you’re hoping to win big with your credit-building efforts, you’ll want to avoid late payments so you don’t negatively impact your credit score.
Here are some reasons why:
A large payment missed can stay on your history
Any missed payment isn’t good, but a large payment you’re late on can certainly make a big splash on that credit score. Owing a large amount of money is going to draw much more attention than a smaller payment you could easily pay off within 30 days.
Your larger payment you’re late on may look like a mortgage payment or a car payment, whereas your smaller payments may be on your credit cards. If you’re unsure of how your credit score is doing right now, you could always get a free credit report from sites that offer this service.
The later it is, the worse it could be
While any late payment is a no-no when it comes to credit scores, the reality is that you can typically be forgiven if you pay your late payment before 30 days. However, surpassing these 30 days could be bad news for your credit score.
The later your late payment is, the worse it could be for you. You may get a lot of calls from collection agencies, and yes, your credit score will plummet. It’s just best to avoid late payments as much as possible, especially if you want to avoid serious repercussions such as your car being taken or hefty penalty charges.
They don’t do much for future credit attempts
If you’re trying to get a loan or open a new credit card, late payments on past credit cards aren’t going to help you out. Your credit score will be impacted by late payments, and there will be information shared on why your credit isn’t the best.
Late payments don’t look very appealing to anyone trying to approve your loan or credit. People want their money on time and when it’s promised, so if you have high hopes for loans in the future, it’s best to dial in those payments and make sure you’re getting them done on time. This may mean spending less and budgeting your money so you can easily pay your cards off on time.
It causes unnecessary stress
A late payment can cause your credit score to drop, which isn’t just a bad idea because of your goal of building up good credit. It can also cause you a lot of unnecessary stress. Having debt in your life can make it feel like you can never get ahead.
It can leave you feeling trapped in the rat race of trying to pay your bills and keep up with your expenses. If you’re going to open a credit card or two, make a plan to ensure timely payments to avoid these kinds of issues that go beyond just a low credit score.
If you have a high credit score, it may drop a lot
If you’re someone with a fair to poor credit score, late payments may not drop incredibly low at first. However, someone with a high credit score may see a significant drop when they miss a payment. If you’re an individual who stays on top of your credit, this could be a detrimental outcome. Do what you can to stay on top of your payments so you avoid these issues with your credit score. You may need to work with a credit advisor to help you create a plan to do better with your credit card usage and credit score.
Late payments on credit cards will impact your credit score. There’s no way around it. But how late you are on those payments can make a difference. Set up autopay and make a schedule of your credit card payments, so you can be confident you’re staying on top of building up your credit score.