If I start paying my monthly payments again, will my credit score improve?

[Anna]

I lost my job recently and still unemployed. I stooped paying my payments since I couldn’t afford to. This has been going for 4 months.

I’ve managed to find a new job last week and would like to return and pay my monthly payment. I won’t be able to pay them retroactively though.

Will my credit score improve completely or at least a lot if I pay them again monthly or will they require I pay them retroactively to get to current?

Thx.

[Tracy Winters]

Your credit score will drop

I’m afraid that your credit score will drop, probably a lot.

Unfortunately, there is almost nothing you can do about it.

Late payments and other negative information can make your credit score go down significantly, and returning to pay your monthly payments won’t help a bit. The most you can expect is that your score will stop going down further.

The late payments remain on your credit report long after you’ve started re-paying them.

For the first two years they show up on your “Two Year Payment History”, and after that a record of you being late remains up to 7 years on your “Seven Year Payment History”.

Even if you pay retroactively up to being current – the fact that you were late remains, impacting your credit score.

With time (assuming no more bad information is added to your file) the impact of these late payments will diminish, but you’re looking at a very slow process that will take a few years.

This is why I’m always telling people – you can never over estimate the importance of NEVER being late, and keeping up payments no matter what.

Usually, the cost of having a lower score turns out to be more expensive than what would have been the cost of keeping current.

[Author]

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