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How late payments affect your FICO score

March 30, 2015 by · Leave a Comment 

The widely used measure of your financial well-being is your FICO score. Thirty five (35) percent of your FICO score is based on your payment history. That is more than one third of your score. What happens if you have late payments and how it impacts your FICO score?

Late payments could be any installment payment that you did not make on time and paid few days late as considered by many creditors. Late payment reporting standards varies among creditors. If you were late on your auto loan, the lender may report it to credit bureaus with your next auto payment billing cycle. This is one reason why you need to pay attention to the “paid as agreed” terms of your loan contract. Missing your payments each month and if lenders keep reporting late payments to all credit bureaus, you may be setting up a bad payment history that can ruin your FICO score.

Unfortunately, late payments could stay on your credit file as the law provides for it. As a rule of thumb, most late payments can stay on your records for seven years from the date it was reported late to the agency. Once a payment is made, some bureaus use label such as “current” to indicate that you brought your account up to date.

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