4 Ways Late Credit Card Payments Affect Your Credit Score
It’s well known that you need to make a payment whenever you carry a balance on your credit card. The credit issuer sets a certain date for the balance to be paid or the due date. Most of these financial companies expect payment before 5 pm on the specified date, or else late payment penalties will be added to the account’s balance.
Making a late payment on your credit card, mortgage, taxes, or loan can hurt your overall credit score. Whether you are a week late or 30 days behind on payments, failing to pay on time could affect you for months, or potentially years into the future. Some debtors would choose to sell my house just to get away from the hassle caused by collection notices and collections agency calls.
The Ripple Effect | Sell My House in San Antonio
Sometimes credit card holders can’t avoid skipping or making late payments due to other financial restrictions or obligations. The ripple effect of any financial crisis can often lead to past dues on several bills.
The Immediate Effect
Late Fee. Even if it’s a day late, as long as no payment is made on the set due date, a late fee could automatically be added to the due amount. The fee ranges from $25 to $35 and will reflect on your next billing statement. If the past due is left unpaid, a late fee is incurred every billing cycle until the total amount is settled.
Higher Interest Rate. Some creditors increase the interest rate when the cardholder misses several payments or becomes delinquent. It often results in a penalty (as a default) Annual Percentage Rate (APR). Once it is triggered, the penalty APR can be as high as 29.99%, which means a significantly higher interest on the outstanding balance. If you are enjoying a 0% promotional APR on a balance transfer, late payments will forfeit this privilege and will reset to the default interest rate.
The Long-Term Effect
On Credit Report. Once payment is more than 30 days late, the major credit bureaus (Equifax, Experian, and TransUnion) will be notified, which means the late payment will be added to your credit reports. If this happens, the unsettled amount could tarnish your reports for seven years. Directly contact the bureau that made the report if you want to make a dispute.
On Credit Score. Nearly 35% of the credit score is about your payment history, which makes it the most important factor in the score calculation. A delayed payment or several past due accounts piling up could drastically bring down your score. The severity will depend on how late the payment is, how often you get behind on payments, and what your current score is.
Delinquent accounts are more difficult to resolve, especially if you are tight with money. And a dropping credit score could only aggravate the situation. In San Antonio, sell house fast is a course of action several individuals turn to just to amass the needed amount to pay off the debt. They would rather sacrifice losing a property that is replaceable, than suffer from the affects of a low score for years to come.
Do you find yourself or someone you know going through a challenging financial situation? Are you unsure how to resolve your credit card late payments? Would you be willing to suffer due to a bad credit score?
RealSprout, a home buying company founded by real estate consultants, has a practical solution for you. Sell my house San Antonio isn’t a scary move, in fact, it has given financial relief to property owners who are dealing with unpaid debts. Talk to one of our consultants for more information on finding the most practical solution to your difficult situation. We listen with your best interest in mind.