How Late Can You Make a Payment Before It Negatively Affects Your Credit Report?

You may have a grace period on your credit reports, but your lender can still charge you a late fee and raise your interest rates

How Late Can You Make a Payment Before It Negatively Affects Your Credit Report?
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May 1, 2018

Most people know that late payments affect their credit. However, few know exactly when late payments will go onto their credit reports and when they will hurt their credit scores.

reporting to the credit bureaus is voluntary

The voluntary nature of credit reporting makes the issue complicated. The Fair Credit Reporting Act does not require lenders or credit card companies to report information about customer accounts to credit bureaus. Instead, it is up to the creditor whether the information is reported to the credit bureaus. This is why you will sometimes find an account on one of your credit reports but not on the others.

creditors must wait a full 30 days before reporting late payments

If your creditor does report late payments to the credit bureaus, they must wait until you are at least a full 30 days past your due date. This is helpful if you accidentally overlook a payment. While the item won't be reported to the credit bureaus, you might still incur late fees or additional interest.

your payment date is based upon when your creditor received the payment

If you are 29 days late on your payment and you drop a check in the mail, don't expect your payment to be credited that day. Some people are still under the mistaken belief that the payment date is when you send the payment. Unless you are making an online payment or phone payment, your payment date will be when the creditor processes your payment. And even if you are making an online payment or phone payment, there might be a cutoff after which your payment is credited the next day. If this is the case, call the creditor and ask about having your payment credited that same day. A fee might apply, but it's better than having a late payment reported to the credit bureaus.

just because your lender doesn't report an item right away doesn't mean it won't show up later

Some creditors will wait a bit longer before sending your late payments to the credit bureaus. So just because your creditor hasn't been reporting payments that are just over 30 days past due doesn't mean the creditor won't report items that are 60 days or 90 days past due. It really all depends upon the creditor. Some will report items immediately while some will wait a bit longer. But there's no way to tell as these things change all the time.

creditors that wait a while to report items can cause confusion on your credit report

Let's presume that you are typically a little more than 30 days late making your payments but your creditor doesn't report these late payments to the credit bureaus. Then you don't make payments for more than 90 days. When you pull your credit report, you'll notice 'on time' payments and then suddenly a 90+ late payment. If you haven't been keeping track of when you make your payments, this might cause some confusion and make you think that there's an error on your credit report. How could you be on-time one month and then more than 90 days late the next month? It's just due to your creditor cutting you some slack until you're delinquent for a few months.

Late Payments and Your Credit Score

Have you ever heard someone say something like "One late payment can't hurt your credit score" or "You have to be late on at least two payments before your scores will take a hit"? Both statements are 100 percent wrong. Just one late payment can hurt your credit score a lot if the creditor reports the late payment. Being 30 days late is bad, but being 60 days or 90 days late is even worse. The sooner you get current, the better your credit score will be.

currently late payments have a bigger impact on credit scores than older late payments

A late payment always affects your credit score, but it has less of an effect as more time passes. A late payment five years ago might drop your score 20 points. But if you have a currently late payment on your credit report, your score will take a much bigger drop. An account that is currently past due is a serious item and might drop you 150 points or more. But if you bring the account back to current status, you can improve your score by just a little bit. But it would take more than two years before your score gets close to what it used to be before the late payment.

credit card companies can raise your interest rates when you're late

A big reason to avoid late payments on your credit cards is the possibility of your rates increasing. That can make a big difference with a large balance and a large rate increase. It used to be that a payment that was late by as little as one minute could cause your interest rate to jump through the roof. But now credit card companies are not allowed to raise your interest rates until you are 60 days past due. The new interest rate might stay in effect until your balance is completely paid or it might remain on your account indefinitely. It all depends on the agreement you have with your card issuer. You don't want your credit card payments this late because it can cost you thousands of dollars in extra interest charges. You might also forfeit any promotional rates.

formats used by credit bureaus for late payments

The format that credit reporting agencies use for late payments looks like this:

  • 30-59 days late
  • 60-89 days late
  • 90-119 days late
  • 120-149 days late
  • 150-179 days late
  • 180+ days late

how not to be late on your payments in the first place

It's not a crime to be a day or two late on a payment. But it's obviously best to not be late at all. Even if the late payment isn't reported to the credit bureaus, you'll still rack up late fees and extra interest charges.

  • Try to get your payment dates all around the same time of the month. If you have four credit cards with due dates scattered throughout the month, it can be easy to miss them. If they are all due around the 15th of the month, it's easy to pay them all at once and budget for the payments. Most creditors are willing to adjust payment due dates.
  • If you aren't able to move your payment due dates (or don't want to), set up a reminder system. You can use your email client if it has a calendar function, your smartphone's reminders, or just the good old fashioned calendar.
  • Set up payment reminders. Most credit card companies have text and email reminders. Many other lenders also have some type of reminder system.
  • Use automatic payments for payments that are typically the same, such as a car payment or mortgage. Make sure that there's always money in your account to cover the payments.