We all know that late payments and even worse, missing a payment, can reduce your credit score significantly. For example, being late more than 30 days with your payment, can reduce your points by up to 35%. Why? Because your payment history makes up to 35% of your total credit score. Knowing that, and practicing some basic financial discipline, will protect your records. But, there are much more sinister ways to drive your credit rating down.
All those small utilities payments, town fees (library, parking, dog registration, sanitation, etc.), if not paid on time, can have a profound negative effect on your credit score. How? Because the bills issuers (mainly the local authorities), no longer chase their bills. Instead, they refer them to collection agencies, who have the power to severely dent your credit score. Just one unpaid bill can take 100 or more points away from your score.
The worst thing is, you never know which institution uses collection agencies, and which not. The solution: pay all. even the smallest bills on time.
