How Do Late Payments Affect My Credit Score?

In addition to adding unwanted fees to your loan and increasing the amount you'll need to repay, late payments can negatively impact your credit score. Because of these penalties and credit score implications, it's important to understand what happens if you miss a payment.

In this article, we’ll take a closer look at late payments, how they affect your credit, what to do if you miss a payment, and how to avoid them.

How does a late payment affect my credit score?

When you’re approved for a loan, the repayment date will be listed in the loan agreement you sign. If you make a payment after the listed date, it's considered late. Late payments can hurt your credit score, and their impact on it depends on several factors:

  • The loan amount: The larger a loan, the bigger the impact a late payment will have on your credit score.
  • How late the payment is: This factor has the biggest impact on your credit score. A payment that’s 30 days late will affect your credit score less than one that’s 90 days late.
  • How long it’s been since your last payment: Your credit score will be the most negatively impacted in the weeks and months immediately following your last late payment.
  • Your current credit score: If you have a good credit score and a positive payment history, a late payment can have a bigger negative impact than if you already have a poor or fair credit score.

How long can late payments affect my credit score?

Late payments can stay on your credit report for up to seven years. Luckily, the impact these payments have on your credit score can decrease as time goes on. Missed payments will start falling off your credit report seven years after the date they occurred.

How does a late payment affect my credit score over time?

The later you are on a payment, the more severe its impact will be on your credit score. Let’s break it down:

Less than 30 days late

Payments that are less than 30 days late typically won’t impact your credit score. As long as you make your payment within those first 30 days after it was due, lenders won't report it to credit bureaus. Your lender might charge a late payment fee, but you may be able to negotiate a fee removal if you have a track record of on-time payments.

30 days late

If your payment is 30 days late, the lender will likely report it to the credit bureaus. This means you may notice your credit score go down. While a single late payment won't have much of an impact on your credit score, repeated late payments will.

60 days late

A 60-day late payment will take a greater toll on your credit score than a 30-day late payment. As with multiple 30-day late payments, the more 60-day late payments you have, the lower your credit score will drop.

90 days late

Once you reach the 90-day late mark, your credit score will take a big hit. Payments that are more than 90 days late face the highest fees and will have the biggest impact on your credit score. Payments this late will also stay on your credit report for up to seven years.

What to do if you make a late payment

Whether you forgot the due date or you don't have the money to make a payment on time, it’s a good idea to follow these steps:

1. Ask the lender to forgive the late payment fee

Your first option should always be to contact the lender directly and ask them to forgive your late payment fee. They are not obligated to do this, but if you're a loyal customer who has never been late before, they may reward you with late payment forgiveness.

2. Pay back the amount due

Make the payment as soon as possible. If your lender is not willing to forgive your late payment fee, you will need to repay the amount owed plus any added fees. Be sure to do this as soon as you can because the longer you wait, the more your credit score may suffer.

3. Write a goodwill letter

Once you’ve resolved your late payment, you might want to send your lender a goodwill letter. A goodwill letter explains why you made a late payment and asks them not to report it to the credit bureaus. While there’s no guarantee a goodwill letter will work, it’s worth trying.

4. Make on-time payments going forward

Do your best to make all your payments on time in the future. It can be easier to keep your credit score in good shape with timely payments than to try to improve it after you’ve made several late payments.

How to avoid making late payments

Here are some ways you can avoid making late payments:

• Set up calendar reminders on your phone so you’ll be able to keep track of when your payments are due.

• Consider enrolling in automatic payments so that you can pay your bills without thinking about it.

• Designate one day each week to review your bills and pay any that are due.

Get the money you need to avoid late payment fees

In some cases, it might be more cost-effective to take out a short-term loan to avoid racking up late payment fees and added interest.

For example, let’s say you have two upcoming credit card payments. Each one charges a $40 late fee. Payday falls a week after the payments are due, so you know you’ll have to pay an additional $80 in fees on top of your minimum payment amounts.

By contrast, the typical fee for a Payday Loan is $15 per every $100 borrowed. In this scenario, you’ll actually save $65 by taking out a Payday Loan to make those payments on time.

Whether you’re trying to avoid late payment fees, utility disconnections, bank overdrafts, or bounced checks, we can help. Visit your nearest Advance America store or fill out our online application now!

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