What Late Payments Will Do To Your Credit Is Worse Than You Think

We’ve all been there – you get busy or distracted and accidentally miss a payment on one of your bills. It happens! But even though it was just a mistake, late payments can seriously damage your credit score. Your credit score is super important for getting loans, credit cards, apartments, and even jobs, so you want to keep it as high as possible. In this article, we’ll break down exactly how late payments affect your credit, and why even one late payment can hurt more than you’d think.

When Your Payment is Considered “Late”

First things first – when is a payment actually considered late? By law, companies can’t report your payment as late to the credit bureaus until it’s 30 days past the due date. So if you’re a few days or even weeks late, but pay before that 30 day mark, the lateness won’t show up on your credit report. Phew! But don’t get too comfortable – you can still get hit with late fees from the company, even if it’s not on your credit report yet.

30 Days Late

Once that 30 day mark hits, the company will report your payment as late to the credit bureaus. This is when the real damage starts. A single 30-day late payment can knock your credit score down by as much as 100 points! Crazy right? Your payment history (whether you pay on time) makes up a huge chunk of your score – around 35%. So even one screw up can tank your credit score fast.

Now, if you already had some late payments on your report, one more may not hurt as bad. But if you have an otherwise perfect payment history, one 30-day late payment can seriously drop your score down fast. We’re talking a perfect 800 score plummeting to 700 or lower overnight. Not good!

60 Days Late

If you thought 30 days was bad, wait until you hit 60 days late. At this point, your credit score is taking an even bigger hit. When a payment is 60 days overdue, it demonstrates a serious pattern of late payments rather than a one-time slip up. Not only will your score drop, but it will take longer to recover too.

For folks with excellent credit, a 60-day late can again knock 100 points or more off your score. But even if your credit isn’t perfect, you’ll still see a big impact. Expect your credit score to drop anywhere from 60-80 points once you hit 60 days past due.

90 Days Late

Now we’re getting into dangerous territory. A payment that’s 90 days late is seriously harmful to your credit score. At this point, a late payment will remain on your credit report for years, dragging your score down. Plus, the company will often send your account to collections once you hit 90 days overdue – another big negative mark.

For people with great credit, a 90-day late payment can crush your score by 130 points or more. Even if you already had fair or bad credit, your score can still drop by 50 points or more. No matter what, a 90-day late payment is terrible news for your credit score.

Even One Late Payment Sticks Around

Here’s the really scary part – even a single 30-day late payment will stay on your credit report for seven years! That’s right, one slip up can keep hurting your credit for almost a decade. Most negative marks like late payments stay on your report for the full seven years. So don’t think that a late payment will just disappear after a year or two. Nope, it will keep affecting your score for a long time.

The good news is that the impact of a late payment decreases over those seven years. A recent late payment hurts your score a lot more than one from 5 years ago. But it’s still on your report, keeping your score down. Moral of the story – avoiding late payments in the first place is key to keeping your credit score up.

How to Recover From a Late Payment

Okay, so you messed up and missed a payment. Now your credit score is tanking and you’re panicking. Don’t freak out just yet! Here are some tips to recover from a late payment and rebuild your credit score:

• Pay the bill ASAP – Get that overdue payment taken care of immediately!
• Call and ask for a goodwill deletion – You may be able to get the late mark removed from your credit report by asking nicely.
• Dispute the late payment – You can dispute the late payment with the credit bureaus if you don’t think it’s accurate.
• Pay all other bills on time – Prevent any additional late marks by staying on top of payments.
• Keep credit card balances low – Reducing your credit utilization can help offset the late payment damage.
• Wait it out – Late payments hurt less over time, so your score will gradually improve.

It will take some work, but you can bounce back from a late payment! Just focus on making on-time payments moving forward.

Avoid Late Payments in the First Place

Of course, it’s better to avoid late payments altogether. Here are some tips to help make sure you never miss a payment:

• Use autopay or calendar reminders for bills.
• Pay bills as soon as they arrive.
• Set payment due dates to match paydays.
• Build an emergency fund to cover bills if money is tight.
• Review account balances and upcoming payments often.
• Contact companies BEFORE due dates if you’ll be late.

Late payments stink, but they don’t have to ruin your credit forever. Now that you know exactly how they impact your score, you can be smart about avoiding and recovering from them. Your credit score will thank you!