How Long Do Late Payments Stay On Your Credit Report?

While you may strive to make all of your credit card payments on time, unforeseen circumstances may arise that cause you to miss a payment. One missed payment isn’t something to beat yourself up about. However, it is important to be aware of how long late payments stay on your credit report. Knowing how late payments affect your credit score and overall financial health can help you get back on track.

In this article, we’ll explore the impact of late credit card payments, as well as five ways to improve your credit after a late payment.

How Long Do Late Payments Stay On Credit Reports?

Most credit card companies don’t report a late payment to credit bureaus until after 30 days. While you may still incur a late fee for making a late payment, if you pay your balance within 30 days, you can typically avoid it showing up on your credit report. Read your card’s terms and conditions or ask your credit card company for more information.

Late payments typically remain on your credit report for about 7 years and can affect your credit score during that period. But there are steps you can take to improve your overall credit in other ways during that 7-year span of time. For example, you can counteract the negative impact of your late payment by developing a plan to pay on time in the future. If you absolutely must make a late payment, keep in mind that the later you are, the more negatively your credit will be impacted.

What’s Considered A Late Payment?

As mentioned above, payments are generally considered late after 30 days. Creditors typically don’t notify credit bureaus until then. A partial payment is also considered late and will be reported after 30 days. It’s important to note that each lender can set their own rules about what constitutes a late payment. So, while these are general guidelines, always double check with your lender.

There are two main types of credit debts that are reported to credit bureaus: installment credit and revolving credit. Installment credit refers to when you receive a lump sum of money and are then expected to pay it back on a fixed repayment term. Student and mortgage loans are common examples.

When you have revolving credit, you’re able to borrow money based on your set credit limit and repay in varying amounts as long as you meet the monthly minimum requirement. Examples of revolving credit include credit card accounts and home equity lines of credit (HELOCs).

Do Late Payments Affect Your Credit Score?

The short and simple answer is yes. After 30 days, late payments can negatively impact your credit score for up to 7 years. However, the severity will vary depending on a borrower’s payment history, as well as what they do following the late payment.

While it’s true that even one late payment can hurt your credit score, the overall impact depends on a number of factors. Some of which include how long the payment has been past due (which is reported in 30-day increments), a borrower’s credit history prior to the late payment, and their payment habits following the late payment.

Say, for instance, that a borrower with an otherwise excellent credit history makes a single late payment. Their credit score will reflect this more significantly than it will a person with a poor credit history, since their lower score already accounts for such negative credit behavior. However, it may be easier for the individual with the higher score (and consequently better payment practices) to raise their score over time by consistently making on-time payments.

Ultimately, no matter your credit score, you can minimize the negative effects of a late payment if you promptly pay off your existing debt and commit to making on-time payments moving forward.

5 Ways To Improve Your Credit After A Late Payment

Even after a late payment, there are steps you can take to improve your credit and remain in good financial standing.

1. Set Up Automatic Payments

Some people fail to make payments on time, not because they don’t have the funds, but because they simply forget. Setting up automatic payments, or autopay, is an easy and quick way to help avoid late payments. You can usually do so online or through your banking app.

2. Select Payment Due Dates

If you have multiple bills, it might be hard to keep track of your due dates which may result in late payments. Some lenders allow you to pick the date your bill is due, which allows you to pick the best due date for your financial needs.

For example, you can choose to make your bills due around the time you receive your paycheck. You could also make all of your bills due on the same day.

3. Review Your Credit Reports

Regularly reviewing your credit score and credit report can help keep you alert to your financial standing. This will allow you to evaluate how your financial habits are impacting your credit score, and then make any necessary improvements.

4. Pay Past Due Bills

The longer it takes to pay off past due credit, the more negatively your credit score will be impacted. It’s vital, then, to pay off any outstanding debt as soon as possible. Even if you’re unable to make full payments, making partial payments can help.

5. Spread Out Credit Applications

When you’re trying to improve your credit after a late payment, you’ll want to be extremely cautious about applying for new lines of credit. This is because applying for a new credit card can result in a hard inquiry in which lenders look at your credit reports.

Hard inquiries can further damage your credit score and will typically stay on your credit reports for two years. Having multiple lines of credit can also push you further into a cycle of debt and lessen the chances of financial recovery.

The Bottom Line: Late Payments Can Affect Your Credit

Once reported to credit bureaus, late payments typically stay on your credit report for 7 years and can affect your borrowing potential. Avoiding late payments, if possible, is the best way to protect your credit. However, there are ways to improve your credit even after making a late payment.

If you’re ready to take control of your financial life. download the Rocket Money^SM app today to closely monitor your credit.