How Late Payments Affect Your Credit Score and Report

Making late payments on your bills and credit accounts can really hurt your credit score and credit report. Even just one late payment can cause your score to drop by as much as 100 points or more! But not all late payments are reported right away, so you may have a bit of time to get caught up before it impacts your credit. Here’s what you need to know about how late payments affect your credit.

When Are Late Payments Reported?

By law, creditors like credit card companies and lenders can’t report your account as late to the credit bureaus until it is 30 days past due. So if you miss a payment but pay within 30 days, it likely won’t be reported and won’t impact your scores. This 30 day grace period gives you some time to get caught up before it hurts your credit.

But just because it isn’t reported until 30 days late doesn’t mean you won’t have consequences right away. Your creditor will likely charge you a late fee, which can be $30-50 in most cases. And they may also raise your interest rate if you habitually pay late. So you definitely want to try to avoid paying late if possible.

How Much Do Late Payments Hurt Your Credit Score?

Once a late payment is reported to the credit bureaus after 30 days, it can significantly drop your credit score. Just one late payment can cause your score to go down by 90-110 points, according to credit scoring company FICO. The impact is usually worse if you previously had great credit and a high score.

For example, if your score was 780 before the late payment, it could drop to 690 or lower once it’s reported. The higher your starting score, the bigger the impact. If you already had fair or bad credit, a late payment may not lower your scores quite as much.

The damage to your credit score from a single late payment can last for years. It remains on your credit report for up to 7 years, though the impact may lessen over time. Multiple late payments or payments that are 60, 90 days late or more can hurt even worse.

How to Minimize the Credit Damage from Late Payments

If you do end up paying late, there are some things you can do to minimize the damage to your credit:

• Pay as soon as possible – Try to pay within the 30 day grace period before it gets reported.
• Call your creditor – Ask if they would waive the late fee given it’s your first late payment.
• Don’t let it snowball – Make sure any other payments don’t also become late.
• Review your reports – Check for errors once it’s reported and dispute any inaccuracies.
• Improve your score – Focus on positive credit habits to offset the late payment.

As long as you learn from your mistakes and get back on track with payments, one late payment here and there will not permanently ruin your credit. Just be sure to maintain positive habits over time.

Strategies for Avoiding Late Payments

Since late payments can be so damaging, it’s really important to avoid them whenever possible. Here are some strategies to help make sure you pay your bills on time:

• Use autopay – Set up automatic payments on credit cards and loans so it’s done on time.
• Use reminders – Mark payment due dates on your calendar and set payment reminders.
• Pay right after payday – Pay bills as soon as you get paid before spending money elsewhere.
• Leave wiggle room – Schedule bill payments a few days early in case of processing delays.
• Review statements – Open and review all monthly statements so you know when payments are due.

Having a plan and system in place is crucial. The busier your schedule gets, the more important it is to have bill paying on autopilot so payments never slip through the cracks.

What If You Can’t Pay on Time?

Sometimes circumstances outside your control make it impossible to pay your bills on time – things like job loss, reduced income, medical expenses, etc. If you are facing a hardship, here are some options to look into:

• Call creditors – Explain the situation and request more time, reduced or waived late fees.
• Use hardship programs – Ask about special hardship repayment plans or forbearance.
• Seek nonprofit help – Organizations may offer financial assistance for bills.
• Prioritize essentials – Pay necessities like housing, utilities, food first.
• Consider debt relief – Debt management plans, consolidation loans or bankruptcy if you can’t keep up.

Don’t be afraid to communicate with creditors and ask for help. Most want to keep you as a customer, so they’ll work with you on a solution. Having a plan can help limit the damage to your credit.

How to Rebuild Credit After Late Payments

If late payments have already hurt your credit, the good news is you can rebuild your scores over time. Here are some tips:

• Pay all bills early – Develop a habit of paying at least a week or more before the due date.
• Lower credit utilization – Keep balances low compared to credit limits.
• Mix up credit types – Have installment loans and credit cards and pay them responsibly.
• Limit new credit – Apply for new credit only when needed to avoid unnecessary inquiries.
• Monitor credit reports – Make sure no errors or fraud are further hurting your scores.
• Give it time – Credit scores can start to recover in as little as 6 months of positive habits.

The most important thing is re-establishing a pattern of on-time payments and keeping balances low. Be patient and persistent and your credit will improve.

The Bottom Line

Late payments can seriously damage your credit, especially if you previously had excellent credit. But you have a bit of a grace period before they are reported and you can take steps to minimize the impact. The key is avoiding further late payments, and having a plan to rebuild credit over time.