A late payment on a credit card or loan can have a serious impact on a person’s credit score. When a payment is late, it is reported to the credit bureaus, which can lower a person’s credit score. The impact of a late payment on a credit score can vary depending on several factors, such as the person’s overall credit history and the severity of the late payment.
One of the biggest factors that determines the impact of a late payment on a credit score is the date of the late payment itself. Typically the more recent the late payment, the more impact it will have on someone’s credit score. Even people with perfect credit can see a big drop in scores from one recent late payment. In addition, the large drop in score can be attributed to multiple factors surrounding the late payment. This includes the late payment itself, the past due amount, the status of the account, and in some cases with a revolving account it can be over the limit.
In addition to the factors mentioned above, the specific credit scoring model that is used can also impact the impact of a late payment on a person’s credit score. Different credit scoring models may weigh the factors mentioned above differently, and this can result in a different impact on a person’s credit score.
Overall, a late payment on a credit card or loan can have a serious impact on a person’s credit score. It is important for consumers to make their payments on time to avoid damaging their credit score. If a late payment does occur, it is important to take steps to address the issue and avoid future late payments to minimize the impact on the credit score. The silver lining however is that a credit score can recover quickly from a single late payment if the past payment is made and future payments are made on time.