When it comes to protecting your credit score, it’s crucial to consider your payment habits. Asking to skip a payment may feel difficult, but it’s a better option than risking a late payment.
In response to the financial challenges faced by its members, USAA is offering relief measures. For affected members, the minimum credit card payments are being waived for three months, although interest continues to accrue. Deferrals are also available for consumer loan payments. In addition, checking or savings account holders won’t be charged with any overdraft fees.
Delinquency is the biggest contributor to a decline in credit score. Your payment history has a significant impact, accounting for 35 percent of your FICO score—the most commonly used credit model among lenders.
FICO scores typically range from 300 to 850. FICO also calculates industry-specific scores, ranging from 250 to 900.
According to FICO, recent late payments have a more detrimental effect on your credit score compared to those that occurred in the past.
Surprisingly, the higher your credit score, the more impactful a late payment can be. Ethan Dornhelm, vice president of scores and predictive analytics at FICO, explains this phenomenon.
A newly reported 30-day late payment could potentially reduce a consumer’s FICO score by over 100 points, depending on their credit profile. Individuals with excellent credit may experience the most significant drop in their score from a 30-day late payment.
For consumers already struggling with credit blemishes, a 30-day delinquency will likely have a less pronounced impact as their lower scores already reflect a higher level of missed payments and risky behavior.
Taking a proactive measure by requesting and receiving a payment break can help to avoid negative consequences on your credit.
If you’re facing financial difficulties, it’s crucial to reach out and explore the available assistance options. Remember, the sooner you seek help, the better.
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