It is wise to pay your bills on time every month without exception. Sometimes things happen that prevent you from meeting your financial obligations. While this can occur for many people on an occasional basis, you want to be careful that it does not become a regular part of your routine. Meeting the due dates for your bills helps to build your credit score by adding positive items to your credit history.

Late Payment Categories

If you were late on a payment for the first time ever, then take a deep breath and relax. One late payment will not radically affect your credit history, but it is good for you to be informed about the different categories of late payments.

  1. Recent – Late payments that happened several years ago will have a minimal impact on your current payment history and credit score. Late payments that are more recent, however, will have a negative effect on your credit history and credit reports.
  2. Severe – Severely late payments refer to bills that have gone unpaid for a month or longer. When your bill arrives, there are categories that reference how many days late the payment is, including 30 days late, 60 days late, and so on. Once a bill has reached the point where it will be sent to a collection agency, it is marked as a charge off. Any notes in your payment history that indicate the involvement of collection agencies will severely damage your credit score.
  3. Frequency – Occasional late payments are not the worst thing to have in your credit history, but frequent late payments are. There are many options to help you make sure that your payments are on time, including online bill pay through your bank, and recurring payment options that will pay your bills automatically.

360 Credit Consulting wants to help you learn how to manage your payments so that you can make late payments a thing of the past and improve your credit score. Call today and schedule your free consultation.