Credit Score Secret: Pay on Time

Late payments bring down FICO score

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One late payment on your mortgage could follow you for years. A payment 30 days late could stick to your credit report for up to seven years and lower your FICO score as much at 110 points.

"That late payment alone may make it that you are not able to refinance for a while," said real estate consultant Mark Goldman. The San Diego State University lecturer says the longer you wait to pay the bigger the impact on your financial future. 

"Thirty days is bad, 60 days is real bad," said Goldman."Ninety days is going to be very difficult. It could be two to four years before you can get another mortgage."

Late payments will not only make it difficult to get a new mortgage but it also can drive up interest rates when getting a loan.

"It effects your credit score," said San Diego County Credit Union President Teresa Halleck, "Your credit score typically effects what kind of interest payment rate you get."

Lenders use credit reports to determine the credit worthiness of a potential customer.

"It shows demonstrated ability to pay and commitment to the lender that you'll do so going forward," said Halleck.

The bottom line, it is important to pay your bills on time. If you want a good score then you have to make your payments before they are overdue.

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