How does late payments affect your credit score?

Credit cards play an integral part in our life. If you are shopping, or you are in the restaurant with your loved one, the credit card enables you to carry out the commercial transactions at that moment without leading you to an embarrassing situation even if you are out of cash.

However, what happens when you fail to clear the credit payment on time? There are several disadvantages if you fail to clear your credits in due course.

First and foremost, if you cross the stipulated time, you will be charged a late fee by your creditor. In your next billing statement there will be an inclusion of a late fee for the missed payments. The late fees generally range from $15 to $35.

If your payment is late every month, you’ll get such late fees in your monthly statements. Next, you will have an increased interest rate. This is because creditors don’t just fine you with a fee, but by increasing your interest rate to the default rate, you’ll be doubly penalized.

If your payments are more than 30-days late, then credit bureaus are notified. In that case, an entry is added to your credit report and will stay for 7 years. And finally your credit score will drop. So it’s better for you not to delay your credit payments. Make your payments on time and enjoy the benefits.