There are a few instances where while juggling between work, you might miss the due date. Payment after a day or so might not harm your credit score if it’s the first time, but if you have a habit of late payment, it can adversely affect your credit score. The effect might vary on how late your fee is and what are the terms of your loan. Many lenders would just impose a late payment fee, penalty interest rate, but in worse cases, put the tab in your credit report that can degrade your score.
Consequences of late payment
As mentioned above, the consequences of a late or missed payment differ on how many days you missed. If it is a week late, the effects might not be fatal on your credit report. Generally, the lenders don’t put the tab of your late payment on your credit report for one month, but after thirty days, the consequences start to pile up. The five standard results of late payment are:
Late payment fee: The immediate repercussion of missing a due date is a late payment fee. The fees vary according to the amount of your credit. It is not a considerable amount, instead just 40 to 50 bucks.
Penalty APR: Late payment can become the leading cause that can spike your pre-decided APR. These payments can be revived back to regular APR (annual percentage rate) by meeting specific requirements such as making consecutive payments on time or paying late fees.
Cancellation of intro benefits: Many companies provide an intro zero percent APR period to their customers. However, if you missed the due date of your payment, there are chances that you might lose your interest-free offer.
Effect on credit score: The primary reason for degrading credit score is late payment. Just remember, if you miss one payment, it will be visible in your report for more than seven years. The late payment reports are updated every two months; hence it is advised to take precautionary measures in that period itself; otherwise, the tabs stay on your credit statement.
You will lose credit card rewards: A late and missed payment can harm your entire credit history. It will cause you to forfeit all the rewards you bagged in years. These are permanent scraps that can’t be redeemed back after timely paying consecutive installments.
Measures You Should Take if You Missed an Installment
If you pay your bills on time and it’s the first time you missed a payment, here are a few instant measures you should take to decrease the degree of backlash.
Pay your bill immediately: It is advised that as soon as you get the information of late payment, call your creditor and pay the bills right away. Sending a cheque might delay the process forward. The amount needs to be transferred to the creditor before it exceeds the terrifying 30-day late mark.
Clarify your reasons: Once the payment is made, call the creditor and explain the late payment reasons. If you don’t have any excuse, request them politely to wipe off the additional charges. If you manage your accounts well, the lenders will grant you your wish immediately. Otherwise, if they don’t agree to the request and increase your interest rate, pay your bills on time for the next quarter and then request the same again.
Sign up for automatic bill pay: The most commonly reported reason why people bear the late payment charges is that they forget to pay the installment because they were juggling between work. We suggest that you allow your banks to make the payments automatically (using the auto-pay system) to avoid the problem. For instance, if you have to make a payment on the first day of every month, you should allow the bank to make the payment five days before the scheduled date to guarantee that the payment is made when you have the desired balance. If you checked the auto-pay option, it doesn’t mean that all your financial worries are of the bank. You still must keep a check on your accounts as auto-pay might be the best choice, but they are your financial affairs.
If late or missed payment is haunting your credit score, contact Atlanta credit Experts, and they will brief you with the best credit repair options available to rectify your degrading credit score.
