Many of like to be in control and proactively review and take advantage of our credit report. This is the report that shows all of the past and present loans, credit cards, disputes and issues on our credit ratings over the years. The reports are used to help determine whether you are capable of paying back a loan faithfully or whether or not you can be trusted with the money that you’re lent and also what types of interest rates you may qualify for.
Your credit report is not like anyone else, it is unique to you and you only have one report regardless of where you live in Canada. This document is a valuable resource for businesses of all types to determine your eligibility on a lot of things related to finances.
One of the common things you here from people is the importance of making your payments on time. Do you have late payments? If you do, it could have a negative affect on your overall rating. The frequency and the how long your late payments go unpaid will have a big negative affect on your credit profile. Sometimes we make late payments because we simply forget and it’s important to know what the implications are.
So, when exactly is a loan payment considered late?
This is something that can’t be answered without having the full details of your credit card agreements or your loan obligations since all banks and financial institutions are different and all have different terms. Most credit card companies will charge you a late fee if you’re a day late on your payment. However, this may not be reported directly to the credit bureau at that time. Failure to make the payment within a certain number of days/weeks may result in a worse outcome. Depending on where you have a loan for a car or a mortgage they may issue you a grace period.
Typically this is an extra ten days or so to make the payment above and beyond the “actual” due date. Again, if you miss the grace period payment date they may charge you a late fee. If you’re more than 30 days late on a loan payment this is when most banks will start to take action. Prior to this 30 days they may try to make contact with you through mailings or phone calls to check on the payment and to make sure it is going to get paid.
There are ‘late payments’ and then there are ‘late payments that hurt!’
Sometimes, when you make a payment past the due date nothing really happens except maybe a late fee charge. Sometimes when you make a payment and it doesn’t show up until a day later, yet your credit card company doesn’t charge you anything. The majority of times, credit cards, banks and even your landlord are willing to give you a chance to pay it. These kinds of late payments are a blessing in disguise. Why? because they don’t ever get reported anywhere and it remains between you and your lender.
However, if you are constantly late or simply decided not to pay your bills until the following month, the lender may decide to report this to the credit bureau. This is where it becomes an issue. A late payment marked on your credit report will affect you for many years! It will be known to all lenders and will have a nasty impact on your credit score. This kind of late payment will hurt!
It is important that you stay on top of your payments. It may seem like something trivial, but the reality is that people who lend money in the form of loans or credit cards like to get paid on time. If you find yourself in a financial jam consider contacting the financial institute and ask for assistance. You may be surprised that as their valued customer, they will be willing to let one slip by.