It’s no surprise that late payments can have a detrimental effect your credit score. However, factors such as how late a payment was or the frequency with which payments are late can affect your score in different ways. Understanding credit repair will help.
Different credit scoring models place different amounts of weight on late payments, but the most common scoring systems are engineered to predict one main thing: the likelihood that you will have a 90-day late payment or worse in the two years after your score is determined. Here is a breakdown of the different lateness levels and how they affect your score:
30 or 60 Days Late – This will only damage your credit score if it is reported as current. If you were 30 or 60 days late one time in the past, it will not have a lasting effect on your credit score. However, if you’re consistently 30 or 60 days late, you will be doing long-term damage to your score.
90 Days Late – This is where your score starts to suffer significant damage. Your credit score will be lowered for any record of being 90 days late, regardless of whether or not it is current. Once you have this on your credit record, scoring systems will determine that you are likely to do it again and will lower your score accordingly.
120 Days Late or more – Being this late with a payment does not directly add to further decreases in your score. However, by this point, your creditor will probably turn you over to a collection agency. This process will be on your report and will lower your score.
Settlements - Making a deal with your creditor can allow your delinquent account to be closed. Under the right circumstances, a creditor may settle for a payment of less than what is owed. For example, if you’re renting an item and you’ve fallen way behind in payments, the renter may be willing to settle if the rental property is returned in good condition.
Quick Credit Repair Tip: While attempting to settle is a good strategy for saving money, it will still show up on your credit report as a debt settlement for less than what was obligated. This can seriously lower your score.
Obviously, reports of foreclosures, repossessions and bankruptcy will lower your credit score significantly as well.
What Does It All Mean for Credit repair?
Simple tips can be gathered by looking at what they’re not telling you about your credit report. If your goal is to raise your credit score, keep these in mind, They all can increase your credit score.
1) Pay your bills on time and do your best to avoid being 30 days late or worse.
2) Carry low balances on high limit credit cards instead of maxing out one card.
3) Don’t close old accounts, even if you never use them.
4) Spread out your credit inquiries.
5) Diversify account types.
6) Try to pay off your debt completely instead of settling.
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