How Missed and Late Payments Affect Your Credit Score

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Missing a bill or credit card payment happens to the best of us: Life happens, and we all make mistakes. Unfortunately, those types of mistakes can affect your credit. A single late payment may cause your credit score to drop dramatically — but there is hope of recovery.

In this article, we’ll break down how missed and late payments can affect your credit score, whether it's your first missed due date or your seventh. We've also provided tips for fixing your score after the fact and keeping your future credit in tip-top shape.

Late payments and your credit score

Paying a bill a few days late won't affect your credit score; however, your lender may charge you late fees. But once your payment is 30 days past due, expect to see a ding. Credit bureaus allow you to miss one full billing cycle before your late payment appears on your credit report. (Note: This 30-day clock refers to the due date, not the billing date.)

A single late payment is serious, but if you fix the problem immediately, your credit will be minimally affected. The longer a bill goes unpaid, the bigger the impact to your credit score. The exact credit score impact of one late payment depends on a few factors. Do you frequently pay late, or is this your first slip-up? And how long did you wait before paying the bill? A 90-day-late payment has a more dramatic impact than one that's just a hair past 30 days overdue.

Generally, you'll see a 90- to 110-point credit score drop for payments that are 30 days past due. But if you already have late payments on your credit report, you may actually see a smaller drop of about 60 to 80 points on your score. That's because your credit score started off lower than someone who has never paid a bill late before.

The size of your late payment can also play a role. While there may be a minimal difference, credit score-wise, between $150 and $200, there can be a huge difference between a $200 and a $2,000 late payment. The more you owe, the further your credit score may drop.

Late payments may affect how lenders weigh your credit score. Multiple late payments may make them pause, and you'll likely see higher interest rates for future loans. But some lenders may see a single late payment as a blip — especially if you paid it off quickly — and won't give it much weight in evaluating your creditworthiness.

Other penalties from a late payment

If you're dealing with a late payment, here are other potential problems:

  • Late fees from your lender
  • Increased interest rates for future loans
  • Penalty annual percentage rates (APRs) for the line of credit on which you incurred a late fee, depending on the creditor's policies
  • Canceled 0%-interest introductory periods

Getting late payments off your credit report

One late payment can haunt you for years to come. How long can late payments stay on your credit score? An astonishing seven years. But there's a silver lining: as time goes on, that late payment will affect your credit score less and less. Soon, it will be nothing more than a blip, and your score will start rising again.

If you think a late payment has been unfairly reported, removing it from your credit report is possible. Here's how:

1. Request your credit report. Each credit bureau will give you a free credit report once a year. You can easily request these reports at AnnualCreditReport.com. (Here's how to understand that report.) You should also check your credit score. This will let you know both how the late payment appears on your credit report, and give you insight into how significantly it affects your credit.

2. Dispute the negative information. If you believe the claimed late payment is inaccurate, you can dispute the information with every credit bureau reporting the error. This can be filed online at each bureau's website or sent by mail (the Federal Trade Commission recommends using the snail-mail route). Also make sure to send a copy of the dispute to the lender or creditor that reported the erroneous late payment. They will investigate and make a determination. If they agree that you did not make a late payment, the report will be removed.

3. Request your credit report (again). Once a year has passed, request another copy of your credit report to be sure the payment has been properly removed. You can also pay for an additional copy if you're on a tight deadline or want to be immediately sure the problem has been resolved.

What to do if you've missed a payment

If you've missed a payment, don't panic, especially if this is the first time. First, pay off the balance as soon as possible. Then, talk to your lender or creditor: if you're within the 30-day window, they may not even charge a late fee — and your credit report will be fine.

However, if you've accidentally sailed past the 30-day period, you can send your creditor a "letter of goodwill" or a "goodwill adjustment," in which you take responsibility for the delayed payment and ask them to remove it from your credit report. This also can work if you've already disputed the payment with the credit bureau, but the case was resolved in the creditor's favor. While they have no obligation to adjust your credit, they may be inclined to work with you if you've otherwise been a loyal and timely customer.

You can also attempt to negotiate a payment with your creditor if you still have outstanding debt. Some creditors will take full or partial payment upfront in exchange for removing the negative mark from your credit report. Make sure you get all terms and agreements in writing beforehand.

What if I can't afford my payments?

Life circumstances and financial troubles can make keeping up with monthly payments a struggle. If you can't afford your monthly payments, here are a few options:

  • Negotiate with the lender. They may help you come up with a payment plan, or put your payments into temporary forbearance until your finances are in a better position.
  • Consolidate your loans. Are you burdened with multiple monthly loans? Consolidation combines multiple smaller loans into one large loan, typically reducing your APR and decreasing your monthly payment.
  • Open a balance transfer credit card. If you've racked up high credit card balances — and are determined to stop adding to the sum — a 0% APR credit card might be of help. If you qualify, you can transfer your existing balances onto this card, typically with a small fee, and pay off the consolidated balance. Because of the 0% APR, you'll save a bundle of cash on interest fees. But these offers often require a very good credit score. And if you’re already struggling with unmanageable credit card balances, this solution may only prolong problems with overspending on credit.

If you're simply struggling to keep track of payments, a calendar or reminder system may be beneficial. Also, open all your mail immediately. Important bills can lurk in innocuous envelopes, just waiting to ruin your credit.

A single late payment doesn't have to ruin your credit, but missing multiple due dates can be catastrophic — at least for the next seven years. Pay careful attention to your incoming bills, otherwise you may see a hit on your credit score. However, if you do miss a payment, there are solutions: working with credit bureaus or your lenders can help reduce the impact.

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