Your payment history is the most influential factor in your FICO credit score, so paying your bills on time–whether they’re to a credit card company or on a loan payment – is incredibly important.
But not all late payments are treated equal, and some may not show up on your credit report at all.
Whether you’re building credit or trying to maintain an excellent score, it’s essential to understand how a late payment can affect your credit and what to do if you have one.
When you apply for a loan or credit card, the lender’s primary concern is whether you’ll pay the debt back on time. If you have a history of late payments, that could be a sign that you’re not a reliable borrower and can make it difficult to get approved with favorable terms, if at all.
The good news is that late payments don’t get added to your credit report until they’re 30 days late.
So if you accidentally forgot to make your payment, or your checking account balance was too low and your payment bounced, you’ll likely get slapped with a late or returned payment fee. But as long as you take action quickly, it won’t go to the credit bureaus or ding your credit score.
“There’s much-needed flexibility for people who are just a day or so late,” says Rod Griffin, director of consumer education and awareness at Experian.
On the flip side, the later a payment is, the more negatively it will affect your credit score.
So once a payment becomes 60 days or 90 days late, you’ll likely see another drop beyond the original one when it was just 30 days late. Not to mention, if you continue to not pay, what started out as a small late fee could become a much larger problem.
This is because the longer you leave a bill unpaid, the less likely you are to ever make a full repayment, and this behavior makes you more of a credit risk to future lenders.
It’s impossible to say exactly how many points a late payment can knock off your credit score, since the individual credit bureaus use several factors when calculating your score, including how long you’ve used credit and how you’re doing in other areas.
“If you have a pristine credit history and you’ve never had a late payment, one 30-day late payment may not affect your credit score as significantly as a series of late payments,” Griffin says.
A late payment stays on your credit report for seven years. The good news is the credit score damage caused by a late payment will diminish over time - assuming you are adding new positive payment history.
“If you miss a payment this month,” says Griffin, “it will be removed from your credit report seven years from this month.”
But don’t worry about your score staying down for that long.
“Time heals all wounds,” Griffin adds. “The longer ago the late payment, the less it will affect lending decisions.”
This means that if you start making your payments on time, the new positive information can help your credit score slowly rebound and get you back in good standing.
In some cases, however, you may be able to get the late payment removed.
“If you’ve never missed a payment before, the lender might be willing to remove it. Life happens, and lenders understand that,” Griffin says.
Keep in mind, though, that when this happens, it’s always at the sole discretion of the lender. Also, it’s important to note that you need to work directly with the lender to make the request.
So if you have a store credit card, you’d need to work with the bank that issues the card instead of the retailer.
You can also get a late payment removed if the lender is at fault. For example, if the lender:
If something like this happens, start by contacting the lender to ask it to remove the negative item. If your request is rejected, you can file a dispute with the three credit reporting bureaus, Experian, Equifax, and TransUnion.
If you missed a payment and it’s not yet 30 days late, pay the bill and the fee as quickly as possible. If your account has gone 30, 60, or 90 days late, do the same, because if you don’t, the lender may send the account to a collection agency, which can further damage your score.
While getting current on your account won’t remove the late payment from your credit report, you can recover over time and improve your credit by keeping up with monthly payments going forward and addressing any other issues with your credit, such as high credit card balances or too many recent credit inquiries.
Recovering from a late payment won’t happen overnight. But as you practice good credit habits over the subsequent months and years, you’ll start seeing your credit score improve again, giving you more credit options in the future.
The Balance. "The Consequences of Making a Late Credit Card Payment". https://www.self.inc/blog/how-do-late-payments-affect-credit
MTEFCU. "6 Things That Hurt Your Credit Score and 4 Ways to Fix It". https://www.mtefcu.org/social-post/6-things-hurt-your-credit-score-and-4-ways-fix-it
Ben Luthi is a personal finance writer who has a degree in finance and was previously a staff writer for NerdWallet and Student Loan Hero.
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