A credit card can be both a blessing and a curse. It gives you flexibility when it comes to spending power. On the other hand, it does a require a certain degree of responsibility and discipline when handling the debt. If you make a mistake, chances are the credit card lender will report it to the credit bureau. Depending upon the error, a bad report from a credit card lender can negatively affect your credit.
Late payments are reported in increments of 30. You can have 30-, 60-, 90-, 120- and 150-day late payments on a credit report. After that, the lender writes it off as a loss. The account will then have a status of charged-off. A late payment on your credit report isn't a good thing to have. In fact, it can do serious damage to your credit. According to FICO, your credit score could drop anywhere from 60 to 110 points just from one 30-day late payment. How much it drops depends on the other account data found in your report.
In addition to payment history, a credit card lender also reports the balance on your credit card. Although it's OK to use the card, over-using it is not a good idea. Credit cards generally have a set credit limit. If you charge the card up to its credit limit, or max it out, that will damage your credit as well. A maxed-out credit card can tank your score by 10 to 45 points, according to FICO.
Your credit report is a financial record of how well you've handled your credit accounts. It contains both positive information and negative data. A bad report from a credit card company can follow you for a very long time. A late payment will remain on your report for up to seven years from the date it occurred. The same goes for a charge-off, which is considered a severe delinquency to have on a credit report.
If your credit has taken a hit from a bad report from a credit card company, don't fret. You have the power to improve your score. Payment history is 35 percent of your overall FICO score. How much debt you carry is another 30 percent. Those two items account for the bulk of your credit score. To improve your credit, make all of your payments on time and reduce debt on your credit cards. Over time, your score will go up, and your anxiety over past credit errors will go down.
Mack Mitzsheva is a tax lawyer, personal finance expert and the author of the forthcoming ebook, "10 Best Places to Work Online." Mitzsheva is also a social media entrepreneur with five successful sites under her belt. Always innovative, Mitzsheva is currently developing a cutting-edge budgeting app for newlyweds.