The Easiest Way To A Low Credit Score

Dealing with a low credit score is a reality for millions of Americans. And while there are many pieces that go into building your score there is one that holds the most weight - making on-time payments.

Nearly 35 percent of your score is your payment history. This includes credit cards and loans with payments that were made late or missed all together.

Why?

Lenders are looking for people they can trust to pay them back on time. Your repayment history is the biggest tool at their disposal to judge whether or not you are a responsible borrower.

If you have a history of making on-time payments you are low risk while someone who has a more erratic history or has a record of many late payments is considered high risk. If you are high risk lenders don't trust that you will pay them back on time so they will either not lend to you or only lend you a small amount.

How Many Affect Your Score?

Late payments can start affecting your score right after the first one. If a payment is late more than 30 days lenders contact credit reporting agencies and that late payment is added to your credit report. According to TransUnion it takes one to two years for the average borrower's score to recover from a single late payment.

What Does It Do To Your Score?

The later the payment the worse it affects your score. Having one or two 30 day late payments doesn't look good but doesn't look as bad as one 90 day late payment, especially if it is more recent. Having a late payment in your report will also make the score drop for another late payment larger.

While one late payment won't get you in too much trouble making it a habit definitely will. According to Equifax a late or missed payment remains on your credit report for seven years, which is significant.

Making late payments can have consequences that aren't just on your credit report. You will also see a higher interest rate and penalty fees. 

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