Everything Matters

This post will be short and to the point.

I want you to know that when it comes to your credit score, everything matters. I met many people over the years as a home loan officer who believed they could ignore small monthly payments and it wouldn't hurt them as much. These were people who would pay their big payments and ignore their small payments. They were everyone from college professors to active duty military men and women, business owners, factory workers. etc etc. That showed me that no matter what people do for a living, what their education level, there is still a lot of misconception across the board about how credit works.

It doesn't matter if your Mastercard payment is only $5 per month. If you aren't paying it, Mastercard will report it as 30 days, 60 days, 90 days past due. They will report it to Equifax, Experian and Transunion. These bureaus also called credit repositories, are the ones that score you based on that FICO scoring model I discussed in my last article. (They should not report you as late unless you become 30 days or more late.) You might have to pay a late fee for being 1 day late but it will not be reported as a late payment to the three bureaus unless it becomes 30 days late.

It doesn't matter to them if you are late on an $800 per month house payment or a $300 car payment, or a $5 Mastercard payment. So if you're one of those people who thinks it's okay to clump 3 months worth of payments together at a time....think again. You'll be ruining your credit score if you do that!! I know it can seem like a pain in the neck to send in $5 per month, but it really does matter. This is your first real lesson about making payments. Make all of them on time every month until they are paid in full.