How do late payments affect my credit score?When applying for credit a lender will review your credit worthiness and assess your credit risk. Though you may think a few late payments have little to no effect on your credit if you are currently up to date on your loan, you are mistaken. Making your payments on-time EVERY month is important. It shows lending institutions you are a trust worthy borrower. When a lender reviews your credit history and see’s late payments it sets off a red flag, warning them of the risk that comes with lending you money.
Issue’s that can occur with late payments:
- Late Fee’s- The fee’s can range from $25-$45 depending on the lender. This can damage you more if you are only making the minimum payments to stay afloat. Your late fee may be just as much as your minimum payment was.
- Decrease of Credit Score- As stated throughout this article late payments do have a negative impact on your credit and can result in higher interest rates as well as denial of credit in the future.