Credit Advice » Loans » Delinquency » What is a Grace Period?

What is a Grace Period?

Dear Experian,

If you make payments within the grace period, does that affect your credit report?

– TWB

Dear TWB,

A grace period is a set amount of time after the due date during which a payment can be received by the creditor without penalty. The grace period can vary, but as an example, mortgage companies could have a 15 day grace period. This means if your payment is due on the first of the month, then you have until the 15th of the same month to make your payment before a penalty is assessed.

If your lender offers a grace period, you typically will not be charged a late fee or reported delinquent if your payment is posted during this time. However, interest may still accrue once the due date has passed.

Will Payments Made Within the Grace Period Affect My Credit?

In general, a lender will not report an account as delinquent if your payment is received within their grace period, so your credit report and credit scores will not be affected. However, each lender will determine their own policy for whether to offer a grace period and how late a payment must be for it to be reported, so it’s best to inquire with each one of your creditors individually if you are unsure.

Usually, you must miss a full payment cycle before a late payment is reported on the credit report. A billing cycle is usually about 30 days. That’s why the report shows a late payment as 30-days late. If you’ve missed two consecutive payments your report would show the account as 60 days late, and so on.

Not all Creditors Offer Grace Periods

Some lenders may allow grace periods only when you have a history of making all your other payments on time. And, some may not offer a grace period at all.

With regard to credit card accounts, the amount of time between when your monthly billing cycle closes and the payment due date, usually 21 days, is considered the grace period by the creditor. Anything paid after that date would be considered late.

Payments received after the due date but before the billing cycle is closed in most cases won’t be reported, but you may still face penalties from the lender, like late fees or increased interest rates.

Thanks for asking,
The “Ask Experian” Team

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