Does Making Late Payments a Couple of Times Affect Your Credit Rating?

Your credit rating can, and probably does, vary among the different credit bureaus. This is due to some lenders reporting the timeliness of your transactions to only one or two credit bureaus while other creditors report to all three major credit bureaus. The three major credit bureaus are Experian, TransUnion and Equifax, and they use a new credit rating system called VantageScore. Several factors determine whether late payments affect your credit rating.

VantageScore Credit Rating

VantageScore has five grades for credit: A (900-990), B (801-900), C (701-800), D (601-700) and F (501-600). A creditor with an "A" credit rating has a history of timely payments while someone with an "F" has a high risk of default. The rating affects your ability to obtain credit as well as the rate of interest charged.

Payment History

Your payment history may determine whether the lender reports your late payment to the credit bureau. Additionally, how late the payment is made determines the amount of damage to your credit score. A payment that is 90 days late will impact your credit rating for a longer time than a payment that is 30 days late, according to Motley Fool.

Lender Policy

Some credit card lenders have a policy of not reporting payments that are less than 30 days late, and others wait 60 days before notifying the credit bureau. Mortgage companies, however, tend to report the status of your payment every month and they generally place the report with all three credit bureaus. Making late payments a couple of times on your mortgage will have an adverse effect on your ability to obtain future credit.

Type of Loan

The type of loan you obtain can affect your credit rating. Finance companies and payday loan establishments often charge a higher interest rate than traditional banks and credit unions. The resulting higher payments increase the chance of default. Just having this type of loan can lower your credit score. Additionally, if you make late payments on a finance company or payday loan, then the credit bureaus may lower your credit rating even more.

One-Sided Reporting

Utility companies and some other creditors do not report your excellent payment record to the credit bureau. They only report late payments, according to the Privacy Rights Organization. This burdens the consumer with never getting a higher credit rating for an excellent payment history yet having the rating dinged for a single late payment.