If you’re looking for the best way to increase your credit score after making a late payment I’m going to show you three steps that you can take to help increase your score after having a late payment hit your credit report.
So how do you increase your credit score after having a late payment hit your credit report? If you want more detailed information about not only repairing your own credit score but a range of financial education including investing and saving then be sure to click the button below and learn how you can increase your credit score for good.
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Before we start talking about three steps that you can take to increase your credit score after having a late payment I want to talk a little bit about how late payments affect us. I meet a lot of people and I talk to a lot of people about their finances and the main thing that I see is that most individuals are taught to run from their finances meaning they they don’t address them head on and when trouble comes the first thing that they push to the side is their finances and I want to do a little bit of a mindset check here because that’s actually the wrong thing to push to the side. We always need to face our finances head-on and make sure that we’re addressing them because when we don’t we end up hurting ourselves when we have late payments hit our credit report. It’s hurting us more than it’s hurting anyone else. I know that there’s the mindset of, you know what? I don’t have it right now so I’m not gonna pay it and they’re just gonna have to wait. You have to understand that when you make late payments, you’re hurting yourself as far as the long run is concerned so you want to try to reduce that as much as possible so that you can do the things that you want to do. If you want to buy a home, if you want to purchase a car, if you want to get a credit card, whatever your goals are, don’t let your actions keep you from that.
Review Your Budget
So number one the first thing that you can do as far as increasing your credit score after having a late payment. You want to review your budget. A lot of times if you’ve made a late payment it’s because you either don’t have a budget in place or you are not following the budget. And I know sometimes that budgeting can seem a little corny and I thought this too but actually it really does help. You want to know where your money is coming from, where it’s going, how much of it has to go out, how much you are saving, all of those things are important when it comes to making payments on time. It is a lot easier to make those payments on time if you have a good solid budget in place and I tell people this all the time. Your budget is actually the most important part of improving your credit because payment history is the largest category of your credit score. It’s 35% of your score and the largest category. So if you have a good solid budget in place it makes it easier for you to make those payments on time because you can plan accordingly. So if you need help creating a good solid budget, be sure to click the button above to access all the information and training inside.
Know How Late Payments Are Calculated
Second way you can increase your credit score after making late payments is to make sure that you understand how the category regarding late payments is actually calculated. In other words how much does it affect your score when you make late payments. Late payments are calculated like this: the total number of on-time payments divided by the total number of payments. That’s going to give you a percentage.
- 100% – Excellent
- 99% – Good
- 98% – Fair
- 97% or less – Poor
So let’s say you only have one account on your credit report and you have this account for a year and you make one payment late. That means you have 11 on-time payments out of 12 total payments. That’s going to put you at 91.6% which is poor because you are below that 97% If you look at that same scenario with five total accounts reporting to your credit report and you only make one late payment that puts you at 59 on-time payments out of 60 total which is going to put you at a 98%. So that 98% is considered fair as far as payment history is concerned. So what that tells us is that the less amount of accounts we have then a late payment is going to make a larger impact versus if we have more accounts that late payment.
Add More Accounts
So that brings us to number three in order to rebound your score from late payments what your going to have to do is add additional accounts to cushion that late payment kind of sandwich it if you will to soften the blow of those late payments on your report. So you do that by adding additional positive credit history. You can add a secured card or maybe an unsecured card if you’re able to get approved. Usually if you have recently missed payments, it’s harder to get approved for an unsecured card. So you can add a secured card. You can go for an account like self lender, which is a savings account. But it reports like an installment loan and they’ll send you the money back after a year. You can get a my jewellers card, which is it’s known to help you build your credit. So there’s different types of accounts that you can get. So ideally what you need to do in order to rebound from that late payment is add additional credit accounts so that you can increase the percentage of on-time payments. It’s actually a misconception for people believe that the more credit you have the lower your score. Having credit extended to you is actually a good thing and lenders don’t look at it negatively. The only time they look at it negatively is when you over extended yourself. Maybe you have a high debt to income ratio, or you’re not managing those payments correctly so that’s really when it’s going to affect you having more credit accounts.
Goodwill Letter
As a bonus I do have a number for one thing you can do if you have had a late payment hit your credit report. Send a goodwill letter to your creditor. I just want to give you a little bit of caution here before I talk a little bit more about the goodwill letter. Goodwill letters have been around for a while but depending on who your creditor is they may or they may not be willing to do this for you. Also, if you have had a lot of late payments, this probably isn’t going to work for you. However, if you’ve had one late payment or one mistake you can send a goodwill letter to your creditor and ask them to remove that late payment in good faith because you have been with them for X amount of time and you have made all of your payments on time and you’re just asking this one time for them in good faith to remove this late payment from you. If you would like some sample letters and learn in detail how to do this yourself just click the button and get inside all the training you need to repair your own credit.
What questions do you have regarding your credit or your finances? I would like to bring more content to you so if you have a question or something that you would like to know about regarding your credit or your finances drop it in the comments below and I’ll be sure to respond.
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