Making a late payment can be stressful. There are late fees and possibly raised interest rates to consider, not to mention the potential negative impact on your credit score. Fortunately, a late payment doesn’t have to knock your credit score off-track. How your credit report is impacted depends on how late your payment is and the individual policy of your lender.
Late Payments and Your Credit Score
The bad news is that late payments can impact your credit score by more than 100 points. The good news is that not all late payments will impact your score. If your payment is less than 30 days late, it should not affect your credit report. The three major credit bureaus – TransUnion, Experian and Equifax – don’t allow creditors to report late payments until they are 30 or more days late. The clock starts ticking from the due date, not the billing date. So if you made your payment 25 days after its due date, it shouldn’t affect your credit report. Your lender could charge you a late fee or raise your interest rate, but it can’t report you to the credit bureaus.
After a payment is 30 or more days late, it is considered a “missed” payment and then becomes cause for concern. Unfortunately, if you have a good credit score, a missed payment that’s reported to the credit bureaus will likely result in a bigger hit to your credit than someone with a lower score.
It’s also important to note that not all creditors will report you to the three credit bureaus for a 30-day late payment. Some may not bother to report you if you’re usually in good standing on your payments and your slip-up was a one time thing. Further, utility companies are far less likely to report you than lenders, unless you miss several months of payments or abandon your account completely.
How Late You Are Matters
The longer your bill goes unpaid, the more likely you are to be reported to the credit bureaus, and the worse off your credit score will be. The credit bureaus allow lenders to report payments that are 30, 60, 90, 120 and 150 days late. After that, the account is usually reported as “charged off,” meaning it’s delinquent. The longer you go without making a payment, the harder your credit score will be hit. For example, a payment that’s 90 days late will have a bigger impact on your score than a 30-day late payment.
How Long a Late Payment Will Affect Your Credit
A missed payment will remain on your credit report and affect your score for seven years. That said, the severity of its impact will lessen over time. If you had a 30-day missed payment four or five years ago and have been in good standing with your lenders since, your one missed payment probably isn’t affecting your score much any longer. Your credit score incrementally improves as you continue to make on-time payments. The longer you go without any missed payments, the better off you are.
An account that was closed in good standing stays on your credit report for ten years. If your account was charged off as delinquent, then that information will be on your credit report for seven years. If you had any late payments on the closed account, they will remain on your credit report for seven years, just like any other late payment.
If a payment is made 30 days or more after its due date, it can be reported to the credit bureaus and affect your credit score. The later your payment is made, the worse it will impact your credit. Late payments will stay on your credit report for seven years.
Chelsea Levinson earned her J.D. from Cardozo. As a former policy researcher, she has a passion for communicating legal issues to the public. She has created legal and policy content for Vox, Levo, Run For Something and more.