You know the best way to get a high credit score is to make all of your payments on time. But, what harm does a late payment really do?
The effect of a late payment depends on the type of loan and the number of days late.
If you pay a credit card within 30 days after the due date, they are highly unlikely to report you at all. The credit card company auditors you late and will charge you a late fee. But they will not report it to the credit bureaus.
If your billing cycle goes from April 1 to April 30 and your payment is due May 1, you have until May 30 before the credit card company will report you to the credit bureaus.
A one time negative mark on your credit typically affects your credit score for about a year.
Very recently, there has been a change in the way the credit bureaus treat late reports. It used to be that a late was a late and that multiple lates to the same creditor were treated as one entry.
Now, the credit bureaus factor in how late the payment was made. A payment made 90 days late will hurt you more than one made 30 days late.
Additionally, each time you make a late payment, this is a mark against you. So potentially, you could get 12 strikes for any one card in a given year.
Because of these new changes in the way credit bureaus report your FICO credit score, many people have not noticed that their scores have dropped. This makes obtaining credit more difficult and expensive.