What is the consequence of making late payments on credit accounts?

Making late payments on credit accounts can significantly lower your credit score, and this is why this choice is correct. Credit scores are calculated based on various factors, including payment history, which is the most important component. When you miss a payment, it signals to creditors that you may be a higher risk, which can lead to a decrease in your credit score. This drop can have long-term implications, including higher interest rates on future loans, difficulty obtaining credit, or even disqualification from certain loan products.

The impact of late payments can vary depending on how late the payment is made; for example, a payment that is 30 days overdue can have a different effect compared to one that is 90 days or more past due. Understanding this relationship between payment behavior and credit scores is crucial for maintaining financial health and credibility with lenders.