Late Payments & Collections

It comes as no surprise to consumers that if you pay your bills late, your credit score is going to reflect those late payments. It’s true that on-time payments count for approximately 35% of your credit score. But, it may surprise you to know that lenders do try to give consumers more flexibility than they might have expected. For the most part, lenders calculate late payments but they use those calculations to predict who will be a risky customer. If you don’t make your payments on time, a creditor will know that you are not a good risk, but as long as you do everything to keep your payments up-to-date and on time, your credit report will remain high.

Late Payments

Surprisingly, 30 or 60 day late payments are not as damaging to credit scores as you might think, but that’s only if these are isolated incidents. It’s only when accounts are repeatedly being reported at 30 or 60 days past due on your credit reports that your credit scores will drop. Consequently, if your payments are 30 or 60 days late infrequently, it won’t cause as much damage to your credit score as you might have expected. However, if you are habitually late with payments, it will be cause for damage to your credit scores. So, keep in mind, 30 days late will only hurt your credit score if it happens often. 60 days late will also not cause too much damage as long it happens infrequently. 90 days late will damage your credit report significantly and will remain on your credit report for up to 7 years.

Letting Bills Go Into Collections

One very important thing to consider is never letting bills go to collections. Debt collectors are only interested in getting your money and usually they don’t care how they go about getting it. Collections result from repeat late payments. Collections are achieved through two different types of collections. The first is the type of collection that has been sold to a 3rd party collection’s agency. The other is a collection that has been given over to an internal collection department. Either way, it will hurt your credit score. When a collection amount is paid in full, it is marked “paid collection” on the credit report, but it is not removed from your report. A collection account will not be removed from your credit report until 7 years has passed.

We are, as our name implies, Straight Credit Counseling, which means we have the straight answers about clear-cut credit improvement strategies that can provide prompt results! If you are ready to rebuild your credit, the team at Straight Credit Counseling is available to find you the perfect credit counselor. To arrange for a session by phone, please feel free to e-mail us at info@StraightCreditCounseling.com. Contact us today and rest in the knowledge that your credit debt will soon be a thing of the past.