What is a Late Payment: Pure and simple, a late payment is defined as "any payment received PAST its due date", where the credit bureau puts into categories of 30 days late, 60 days late, 90 days late, 120 days late, etc. The truth is, not all late payments are reported to the credit bureaus.
Example: A mortgage loan has a due date of the 1st of every month. A grace period of 10 to 15 days is given without a late penalty. But am I considered late if I make my payment on the 2nd of the month? That answer is YES. Grace Periods on loans are often misused and misunderstood by the public, but a nice feature to have in case of emergencies or mailing delays. Not all loans have grace periods, such as charge cards.
Late payments will have an ill effect on your credit scores. Also, if you as a buyer are considering applying for a mortgage, any late payments reported on your credit will impact what interest rate you will be paying OR more importantly, if a mortgage loan will even be granted to you.
Does your credit report show late payments? Well, all is not lost. The good news is, you can always change the past with good behavior. If you find yourself in a credit crisis, several late payments, with feelings like you can never be made whole...there is hope. Once you can get back on your feet, begin making payments on time, the past credit crisis will slowly disappear with your credit report improving IF you stay on track. The more time that passes, the less the affect on your credit score & credit portfolio.
There is a saying in lending, you only have to worry about the past 7 years (unless a bankruptcy, judgments, child support in the arrears or tax liens are involved). To stay out of harm's way, it is best to follow a monthly budget when it comes to paying debts, never borrowing what you can not afford to pay back. Emergencies do happen, so a nest egg of savings should be a priority in your life.
The world we live in, has corrupted so many of us into a paycheck to paycheck lifestyle, which is an accident waiting to happen. Want financial freedom and stability? Curb spending, monitor your debts, stay away from check cashing companies with high fees, stay away from high interest charge cards, put money into a savings plan weekly. It's your money, spend and use it wisely!
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