Here is a list to help you to avoid the common pitfalls of sabotaging your credit. The more we understand about which credit related mistakes to avoid, the better equipped we’ll be to establish, protect, and maintain great credit scores. One of the most common credit killers is, without a doubt, the late payment, which isn’t quite as straightforward as you may believe.
How Late Payments Impact You
Late payments, especially recent late payments, can pose a problem when it comes to credit scores. The design purpose of the FICO and VantageScore credit scores is to predict the likelihood of a consumer going 90 days late on any credit obligation within the next 2 years. If a consumer’s credit reports demonstrate that he or she is likely to pay a credit obligation late, his or her credit scores will reflect such.
Approximately 1/3rd of the points in your credit scores are allocated from the payment history category. The truth is that the presence of recent late payments can make it very difficult for a consumer to maintain decent credit scores.
What to Do In the Event of a Late Payment
The best way to avoid late payments is to commit to follow a planned budget and to make all payments on time. Having more obligations than money will ultimately spell financial and credit score disaster. However, in some cases an isolated late payment may occur due to an oversight, an error or other unusual circumstance. With isolated late payments, it is sometimes possible to undo the damage if the consumer can convince his creditor to grant him a goodwill removal of the late payment from his credit reports.
Consumers should certainly not bank the goodwill removal strategy as part of their credit management strategy. However, if a consumer has a great history of on-time payments with his creditors and an isolated late payment occurs then it is sometimes possible for a consumer to talk the creditor into essentially forgiving the late as a one-time courtesy.
In order to request a goodwill removal of a late payment, simply give your creditor a call. (Tip: it usually helps to request a supervisor as it may take someone a little higher up the corporate food chain to have the authority to approve the request.) Of course the creditor may refuse the request, but it does not hurt to ask. If a goodwill removal is granted then the consumer can expect his credit scores to immediately rebound as soon as the late payment is removed from his credit reports, assuming there have been no other negative credit report changes.
An additional thing to keep in mind is just how past due you became in the first place. Creditors are not allowed to report late payments to the credit bureaus until you are a full 30 days past the due date. That means if you do end up with a late payment on your credit reports you were, in fact, one full cycle past due. Don’t try to argue with your creditors that you were almost on time because by the time a late payment ends up on your credit reports you were very late.