Many people underestimate the impact of a late payment. A recent late payment can result in a 90 to 110-point drop in your credit score. The only remedy against the adverse effects of late payments is time. If life’s circumstances prevent you from making your payments on time, contact the creditor immediately and request an extended grace period. Consider the following.
The higher your credit score the more a late payment will affect you.
Recent late payments have a greater negative impact on your credit score than older late payments.
Each degree of lateness affects your score differently. A 30-day late payment has a less damaging effect than a 60-day, 90-day or 120-day late payment.
A late mortgage payment has a more damaging effect than a late bill or credit card payment.
Being 120 days late in making a bill payment can result in a collection or a charge-off. Your score is going to be affected by both the degree of the late payment and the collection or charge-off status.
Regardless of the amount, all late payments have the same effect on credit score. A 30-day late $500 bill payment has the same effect on your credit score as a 30-day late $50 bill payment. With this in mind, it is better to pay multiple smaller bill payments on time rather than a larger bill payment.
Remember, if you are trying to improve your credit score in order to qualify to buy a house, the only remedy for late payments is time.