Question

credit scores and reports quick check
kate missed a payment on a loan a year ago when times were rough, but has made all payments on time since then.
which statement describes how her credit score will most likely be affected by this scenario?
(1 point)

her score will go down at first, but the on time payments will slowly raise it back up again.
the on time payments will not help; her score will be permanently lowered by the late payment.
there will be no impact; payment history only goes back six months.
there will be no impact; the on time payments will completely erase the mistake of the late payment.

Explanation:

To determine the correct answer, we analyze how credit scores work. A late payment (like Kate's missed payment) initially lowers a credit score because payment history is a major factor in credit scoring. However, consistent on - time payments over time can gradually improve the credit score as positive payment behavior is also a key component of credit scoring models.

• The second option is incorrect because on - time payments do help improve credit scores over time; a single late payment doesn't permanently ruin the score.
• The third option is incorrect as payment history in credit scoring typically goes back longer than six months (usually several years, with the impact of a late payment lessening over time with good behavior).
• The fourth option is incorrect because a single late payment isn't completely erased by subsequent on - time payments, although its negative impact lessens.

So the first option accurately describes the impact on Kate's credit score.

Answer:

A. Her score will go down at first, but the on time payments will slowly raise it back up again.