First, you need to understand the importance of timely payment to resolve the late payment issues.
What is the Importance of Timely Payment in the Credit Repair Process
Timely payment is one of the most crucial factors in maintaining and improving one’s credit scores. 35% of the credit score belongs to the timely payment fact. So, the most powerful fact, a favourable factor, is solely enough to damage your credit history badly. Late payments can make it difficult to secure loans, credit cards, or favorable interest rates. Understanding the importance of timely payments in credit repair can help you build and maintain good credit.
How Does Late Payment Affect Your Credit Score?
Credit bureaus categorize the effects of late payments based on how overdue they are.
- 30 Days Late: It Can lower your credit score and may stay on your report for up to seven years.
- 60–90 Days Late: It has a more severe impact than 30 days. It shows a pattern of your financial instability.
- 120+ Days Late: It may result in the account being shut down or accounts being sent to collections. It severely damages your credit.
Late payments remain on your credit report for seven years, but their impact decreases over time if you maintain consistent, on-time payments moving forward.
Can Credit Repair Remove Late Payments?
Removing late payments depends on the situation. Situations for example;
- You can dispute inaccurate late payments with the credit bureaus if the late payment is an error. If it is proven incorrect, they must remove them. You can dispute through Experian, Equifax, or TransUnion.
- If the late payment is valid but you have a strong good payment history in the past with the creditor, you can request a goodwill removal. Some lenders may remove it as a courtesy.
If a late payment is valid, it will remain on your report for up to 7 years. You need to wait and maintain a good payment habit to decreas the negative marks gradually. [Note: Be aware of scammers. Some credit repair companies claim that they can remove late payments. But in reality, a legitimate company can’t remove late payments if they are valid.]
What are the Benefits of Timely Payment?
Paying on time boosts an individual’s credit score, as payment history accounts for 35% of the score.
- You will get better loan approvals as lenders prefer consumers with solid payment histories.
- You can use your credit cards at lower interest rates.
- You can get rid of unnecessary penalty payments if you pay on time.
- Consistently missing payments may lead to legal actions, debt collections, lawsuits, or wage garnishments. However, you can avoid these troubles by paying on time.
- What Strategies Can be Followed to Ensure Timely Payments?
- You can set reminders using financial apps or mobile calendars if you forget the due dates.
- You can set automatic payment options using the bank’s autopay features each month.
- Budget can make you eligible to save the amount of loan payments. So, just before starting the month, create a budget of your expenditure. Prioritize your credit bills and loan payments while budgeting.
- Paying more than the required minimum reduces debt faster and decreases interest charges. This is also considered as responsible financial behavior to lenders.
- If it is becoming tough to manage the loan payment each month, contact the creditors to negotiate a better payment plan.
How to Recover from Late Payments?
If you have already missed payments and are struggling with a low credit score. You can-
- Pay an outstanding amount as soon as possible to catch up on the missed payments.
- Request the lenders to consider you based on your good payment history. Some lenders may
- remove late payment history from the report based on the consumer’s good payment history.
- Dispute the inaccurate items with the credit bureau from the report if your late payment is an error.
- Try hard to maintain consistency in timely payment to get a better future.
The effects of missed payments harm one’s credit and finances. It can destroy all the good history of the credit in a single mistake. So, be careful with your timely payment habits.