Missing one payment to a creditor might not seem like a big deal. That is until it is time to search for your next loan and it causes your lender to rethink your loan’s terms—or even your overall eligibility.
Being an absent-minded bill payer is important to credit bureaus and ultimately to your lender. Continually skipping payments can seriously bruise your financial future.
The elements from your credit report that shape your credit scores are called credit score factors. Factors that may affect credit scores include:
- Your total debt
- Types of accounts
- Number of late payments
- Age of accounts
The credit score is calculated by the following weighted factors:
- Payment history (35%)
- Debts (30%)
- Length of credit history (15%)
- New credit (10%)
- Type of credit used (10%)
Many people aren’t sure how different types of credit can affect their score. However, with 20% of your FICO score being made up of new credit and types of credit used, it’s a good idea to pay close attention to what kind of credit you’re using and how it can affect your score.
Factors indicate the elements of your credit history that have the greatest effect on your credit score at the time it was calculated. These factors also point out the elements of your credit history that you must address to become more creditworthy over time.
Just one single missed payment can have a negative effect on your credit score. If you’re late with more than one creditor, your credit could take a significant hit. Multiple late payments could be reported several times. Severely late payments, which would be at least 60 days late, will have a heavier impact than payments made within 30 days.
Did you know that late payments stay on your credit history for 7 years?
How to Improve Your Score
If you’ve missed just one payment or multiple payments, then the best method of improving your credit score is being dedicated toward making timely payments from that point on. The biggest impact to your score will be noticed once late payments or collections are reported. Over time, regular payments will result in a gradual improvement in your credit score. Pay every bill on time, pay off collections, and settle any judgments.
Visit Your Heartland Bank Mortgage Lender
Prequalify with Heartland Bank today for your next mortgage. Our experts will help answer any questions about your credit score and guide you to the right mortgage product.
Fili Sanchez (NMLS #528671) is the Vice President and Mortgage Relationship Manager for our Kearney, Riverdale, Burwell and Ord markets. He has been with Heartland Bank for 10 years and has 15 years of mortgage lending experience. He is also a recent graduate of the Advanced School of Banking. Fili enjoys participating in the community with the Kearney Area Chamber of Commerce, Leadership Kearney, Nebraska Banker's Association, and serves on the board for the Yanney Heritage Park Foundation. Outside of the bank, he enjoys spending time with his wife and three children, traveling to kids' sports activities and family vacations.
