Final answer:
The statement is false; there are multiple factors that can negatively impact a credit score, not just late payments. These include high credit utilization, frequent credit inquiries, and a short credit history. Good credit habits and responsible borrowing are essential for maintaining a healthy credit score.
Step-by-step explanation:
This statement is false. While being late on payments can negatively impact your credit score, it is not the only factor that can have an effect. Your credit score can be improved by paying your bills on time and managing the amount of credit you use. Additionally, carrying a balance on your credit card will result in interest charges, which can add up over time and impact your financial health.
It is also important to note that several other factors can negatively affect your credit score, such as having a high credit utilization rate, applying for numerous credit accounts in a short period, having a short credit history, or defaulting on loans. Lastly, diversifying your credit mix and maintaining older accounts can contribute positively to your credit score.
Lenders use credit scores to make informed decisions based on a borrower's past and present financial behavior. They consider various aspects, such as repayment history and credit utilization, to gauge the risk of lending. It is a fair system in which personal demographics like race, gender, and religion do not influence the decision process, and a poor credit score isn’t permanent if good credit habits are practiced thereafter.