A missed payment as a one-time affair won’t destroy your credit. In fact, most places would consider it a normal part of your credit history. However, if you have a history of missed payments, it could cause real trouble for your score.
No one wants to ignore their financial responsibilities, but life happens. Unemployment throws off your income, unexpected emergencies tap into your savings… The list could go on and on.
The truth is, it doesn’t matter much whether you miss payments several times in a row, or in dispersed accounts over time. Too much of them will indicate that you’re an unreliable and inconsistent investment―not exactly the type of reputation you want while seeking access to more credit.
Financial institutions use your credit history to determine whether you’re a risky investment or not. If you can’t keep up with simple payments on the things you already owe, why would someone give you even more money?
The real question is, how much does a missed payment affect credit score?
A Tip To Prevent Missing Payments
It’s easy to think that someone offering you a line of credit is the same thing as someone giving you money. It’s really not. In fact, whether it’s credit cards or a loan, these types of things are financial obligations. Not gifts.
That’s why it’s important to contemplate the financial load of any credit card you’re taking into consideration.
If you aren’t ready for the burden, you’ll inevitably fall behind on payments. This becomes a vicious cycle that could put you in a bad situation.
Everyone Falls on Bad Times
Everyone knows that unexpected financial emergencies happen. You could fall into a health crisis, you may lose your job, or there might be a home improvement emergency at home.
But bad times aren’t a reason to shirk your financial obligations.
If you miss a payment on one or more of your credit lines, lenders will see you as a risky prospect. They may stop issuing you a loan or increase the rate if it hasn’t been locked in yet.
So, How Many Times is TOO Many?
Honestly, even one time is too many. If you have been more than 30 days late on your payment, your creditor may report it to the credit reporting agencies (CRA). After it is reported, it will show up on your credit report.
When it comes to FICO, a late payment will be evaluated on the basis of ‘how late’ it was. If you were 30 days late, it may not be that big of a deal. But anything more than that can add up incrementally. The problem gets exponentially worse the more you delay it.
According to FICO data, a 30-day late payment can cause a 90 to 100-point drop on a score of a consumer who’s leading around 780. This is why it’s so important to make payments on time so that your score can be ahead of the curve.
For someone who’s hovering at a 680, a 90-day credit card account could see a dip of 80 points if they’ve been late and hit with back to back delinquency issuances.
Late payments do add up over time, but it depends on the case. Don’t take someone’s advice on the matter and take it from the experts. Contact us today if you’d like support repairing your credit score.