What financial behavior can result in a negative impact on your credit score?

Making late payments on loans can significantly adversely affect your credit score. Timely payment history is one of the most critical factors that credit scoring models consider, often accounting for about 35% of the score. When payments are late, it indicates to creditors that there may be issues with managing finances, which can lower the perceived creditworthiness of an individual. Late payments not only reduce the credit score immediately upon reporting but can also stay on the credit report for up to seven years, continually influencing future credit opportunities and interest rates.

In contrast, paying all bills on time and maintaining a low credit utilization ratio contribute positively to a credit score. Similarly, having a mix of credit accounts can demonstrate responsible credit use, further enhancing the score. These behaviors all reinforce good financial management, whereas late payments clearly signal a risk to lenders.