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How much impact do negative marks have on your credit score?

What happens if you miss a payment? Does it impact your score, and if so, for how long? Learn what could happen and why.

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How much impact do negative marks have on my credit score? As you probably know, one of the best things you can do to keep your credit score healthy is to always, always, always pay your bills on time.

Now, if you’re able, paying more than the minimum on your credit cards is also an excellent way to boost your credit score. But what if you mess up, and miss a payment? How long do you have to deal with the consequences and how severe are they? While most missteps will eventually go away, it’s much better to try and avoid them in the first place, right?

It can take between 7 and 10 years for most negative marks on your credit to disappear from your credit report. Yikes. Now, not all negative marks on your credit report have the same effect. For example, new credit inquiries, like if you apply for an auto loan or try to get a new credit card, will reduce your credit score in the short-term, but essentially have no real long-term effect. If you manage any new debt well, like making your payments on time, very good, paying more than the minimum, and not carrying high balances, it can even boost your score. Nice. But let’s talk about some missteps, like late payments.

Did you know that those can typically stay on your credit report for 7 years? Yeah. And that doesn’t necessarily mean your credit is ruined because of one late payment. But a pattern of missed payments can be pretty damaging. If you were just a few days late, this often won’t appear in your credit history. It’s when you fall a full payment behind, it gets reported to the credit agencies. You should still avoid late payments, though, even if you’re only a couple of days late, because in addition to maybe being charged fees and penalties, your lender might be watching this type of activity to see how well you handle the account.

Now let’s talk about some other negative marks. Most bankruptcies generally will stay on your credit report for a minimum of 10 years. And some other items like unpaid tax liens could take even longer. They can stay on your report until the debt is settled… plus another seven years after that. So obviously, we’re better off avoiding these negative marks whenever we can, right? But what if you’re having some difficulty making ends meet? Well, being honest and upfront is probably the best policy. Talk to your creditors and explain your situation. Ask them to help you find solutions during these difficult times. Always keep the lines of communication open. Don’t ignore phone calls or letters. Creditors will often work with you to find a solution that works for everyone. Being proactive about rebuilding or improving your credit can get you on the right path to a higher credit score.

 

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