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Just one 30-day late payment can hurt your credit scores. Payment history is the most influential factor in calculating your credit score, accounting for roughly 35% of your FICO® Score☉ , the score used by most lenders. Any late payment reported to the credit bureaus will have a swift and significant effect on credit scores and will remain on your credit report for seven years. Here's what you need to know about late payments and your credit—and how to avoid additional late payments down the road.
What Happens When Your Payment Is Late?
When you make a payment after its stated due date, you're generally subject to a late payment fee. This can happen immediately or following a designated grace period (more on this in a moment). You may also lose access to promotional interest rates on your credit card, which can be costly if you carry a large balance.
If your payment is 30 days or more past its due date, your creditor may also report your late payment to one or more of the three credit bureaus: Experian, TransUnion and Equifax. The impact one late payment has on your credit score depends on your unique credit history. For example, if you have excellent credit and this is your first late payment, your credit score may drop significantly—more dramatically than it would for someone who has already accumulated multiple late payments. Why? After a string of late payments, that person's credit score has already sustained damage.
On the other hand, your excellent credit score and clean history might allow you to maintain a relatively good score, even with one 30-day late payment. And a single 30-day late payment is less impactful than a payment that is 60, 90 or 120 days late.
When Will a 30-Day Late Payment Fall Off Your Credit Report?
A 30-day late payment stays on your credit report for seven years, at which point it will automatically drop off your credit report and no longer affect your credit score. Its effect on your credit score will also diminish over time. If your 30-day late payment turns into a 60-day, 90-day or 120-day late payment, the entire series will drop off your credit report seven years after the original delinquency date.
What if Your Payment Is Only a Few Days Late?
Being even a day late with your monthly payment can have different consequences depending on the type of loan or credit card and your agreement with the lender. For example, mortgages and car loans often have a grace period, during which you can still make your loan payment without paying a late fee. A typical grace period on a mortgage is 15 days—but check your loan agreement for details about the grace period your lender may extend.
Credit cards don't usually offer this type of grace period: If you're as little as one minute late, you may be subject to a late fee and may be switched to a higher interest rate as well. When credit card companies refer to a grace period on their accounts, they're usually referring to the period before you're charged interest on a credit card purchase. So, if you buy a sofa for $2,000, and pay the entire $2,000 balance before your grace period ends, you don't owe the credit card company any interest.
How does a payment that's just a few days late affect your credit report? A payment that's not yet 30 days late—or one full billing cycle—probably won't be reported to credit bureaus if it's brought current before 30 days are up. Until that point, your late payment is an issue between you and your creditor. You may be subject to fees or higher interest rates, but you shouldn't suffer a hit to your credit score.
How to Avoid Late Payments in the Future
Going forward, the best thing you can do for your credit scores is to avoid late payments and pay your bills on time, every time. A few tips to keep you on track:
- Consider setting up automatic bill payments in your online banking account.
- Add payment due dates to your personal calendar.
- Set up reminders or alerts so you don't miss due dates.
You may see ads for credit repair companies that promise to remove late payments from your credit report. Just be aware: Accurately reported late payments won't be removed. Your time and effort are better spent on cultivating good credit habits so you can improve your credit score yourself over time.
While you're doing this, it's a good practice to check your credit score and report regularly, which you can do for free through Experian. You'll be able to spot and address any inaccuracies on your credit report as they arise and monitor your progress as your credit improves.