Staying on top of all your bills can be difficult and sometimes you’ll have to miss a bill to prioritize other necessities. The good news — missing a payment by a couple of days or weeks won’t hurt your credit. However, once you’re 30 days past due, the late payment could be reported to the credit bureaus. It can then stay on your credit report for seven years, even if you bring your account current.
What is a late payment?
A late payment is when you don’t make your minimum required payment by a bill’s due date.
Some creditors offer a grace period and give you a couple of days or weeks to pay your past-due bill without a penalty. With others, being late by even one day could lead to a late payment fee and lost benefits, such as a promotional interest rate on a credit card.
When will a late payment hurt your credit?
Although you only need to be one day late to get charged a fee, the timeline is different when it comes to credit reporting.
You need to be at least 30 days late for a creditor (such as a lender or credit card issuer) to report your payment as late to the credit bureaus. Accounts that are one to 29 days late are still considered current.
This means you have time to bring your account current — or come to a different arrangement with the creditor — before a late payment hurts your credit.
How do late payments affect your credit score?
Late payments that wind up in your credit report will often hurt your credit score. Multiple late payments — either on different accounts or missing several payments in a row — can hurt your score even more. However, the specific impact depends on your overall credit profile.
For example, FICO looked at how different actions could affect five people’s credit scores. A single 30-day late payment led to a score drop of 17 to 83 points — a fairly wide range. Falling further behind on payments can also increase the impact and a 90-day late payment led to score drops of 47 to 113 points.
A late payment will generally hurt your score less if you have a low credit score. If you have a history of missing payments, then missing another payment isn’t much of a surprise. Your low credit score already accounts for this possibility.
However, if you’ve never missed a payment and have excellent credit, a late payment could be particularly troubling — perhaps a sign that your financial situation has changed. And you may experience a larger score drop, reflecting the increased chance that you’ll miss another payment soon.
How long do late payments stay on your credit report?
Late payments can stay on your credit report for up to seven years and they could affect your credit score the entire time. However, the exact timeline will depend on whether you bring your account current after missing a payment.
If you miss a payment and bring the account current, the late payment will be removed seven years later. When you miss several payments in a row, that group of late payments gets removed after seven years. And the timeline is the same whether your account is still open or closed.
For example, if you pay off and close your credit card, the closed account will stay on your credit report for 10 years. A late payment in the card’s payment history will fall off your report seven years after you missed the payment, but the rest of the account can stay in your report and continue helping your credit.
If you miss a payment and never bring your account current, the late payment will mark the original delinquency date for the account. After several missed payments, the creditor could charge off your account and send it to collections. Now, you might see the original account and a separate collections account on your credit report.
When your missed payments lead to an account closure, the credit bureau will remove the entire account and any related collection accounts seven years after the original delinquency date — the first late payment in the series.
How to avoid making late payments
Keeping track of your bills’ due dates and setting up automatic payments might help you from accidentally missing a payment. Although you’ll also want to make sure you have enough money in your accounts to avoid overdrawing your account.
If you’re going to miss a payment because you can’t afford all your bills, try contacting your creditors before your bill’s due date. They may offer a temporary hardship plan and defer or lower your payment.
You could look for ways to lower other bills as well. For example, asking your utility providers if there are any assistance programs available and then use those savings for your other bills. Also, consider reaching out to a credit counselor if you’re struggling with credit card debt in general. The counselor might be able to get you on a debt management plan (DMP) and negotiate lower interest rates, monthly payments, waived fees and bring past-due credit card accounts current without requiring a large payment.
