December 19th, 2017 7:59 AM by Jackie A. Graves, President
You open your statement and discover you’re
late on your credit card payment. Or you get a call from a collection agency
about a medical bill you
forgot to pay. Or you check your credit reports and discover a late payment is
marring your otherwise perfect payment history.
happens if you miss a credit card payment? How do late payments affect your
credit scores? Of course, as with so many things related to credit scores, the
answer is, “It depends.”
payments and good credit scores go together like toothpaste and orange
juice—they don’t mix. But just how bad is it to miss a single payment?
depends on how many days late your payment is. If you missed your credit card
payment by one day, you probably don’t need to sweat it.
lucky, the lender won’t report the lapse. “Most lenders do not report missed
payments until the account is 30-plus days past due,” says Anthony Sprauve, PR
director for MyFico.com.
“Suppose a given credit card payment is due on May 15
[and you pay on] May 25. Technically, the payment is late, and fees and
interest charges may apply. But in most cases, this late payment would not be
reported by the creditor to the credit reporting agencies [CRAs].”
your lender may overlook the transgression. Steve Ely, president of
eCredable.com, adds, “The larger creditors [like credit card companies] usually
have sophisticated analytic models working behind the scenes that take into
account your history of payments. If you’ve been paying on time for a long
time, they’re likely to forgive your one late payment and let it slide.”
What if you don’t luck out and the creditor reports the late payment?
Here are three questions that will help you understand the possible impact,
according to Barry Paperno, community director for Credit.com:
1. How long
ago did the most recent late payment occur?
severe were the late payments (30 days, 60 days, charged off, etc.)?
3. How many
accounts on the credit report have had late payments?
three questions, the one typically having the most impact on your credit score
is the first: recency,” says Paperno. “To illustrate, if a single late credit
payment occurred a few years ago and all payments on all accounts have been
made on time since, that single late payment will have little negative impact on
To put the potential consequences in perspective, Paperno
points to a study about credit scoring effects conducted by FICO that points to
a scary possibility. “[A] recent late payment can cause as much as a 90- to
110-point drop on a FICO score of 780 or
Although score drops from late payments tend to rise
again over time, these credit dings can remain on your credit report for
seven years, according to Paperno. You can expect the effects to last for much
of that time.
also explains that the impact of a missed credit card payment or late bill on
your FICO credit score varies significantly depending upon the individual
consumer’s circumstances. He details some of the factors that can help
determine how much a late payment will hurt your scores:
Any history of account delinquencies or collection references (on
Any adverse legal items on your credit report
The outstanding balance on the delinquent account
The number of other accounts on the file that you’ve currently
paid as agreed
The length of your credit history
is, the better your credit, the more you may feel the sting. One slipup and
your credit score may take a dive—even if you have otherwise stellar credit.
“The old [adage] of ‘the bigger they are, the harder they
fall’ applies to credit scores too,” warns Ely. “If you have a really high FICO Score,
you’ll take a bigger hit for a late payment than someone with a lower FICO
defense is to be meticulous about paying your bills by the due date. But if you
do mess up, see if you can’t convince the lender or collector to remove the
ding from your reports. While they may balk at first, you may be able to
persuade them to change their mind if you have a good explanation—and they
believe you when say it won’t happen again.
If you’re concerned about how late payments could be
damaging your credit, you can check your three credit reports for free once a
year. To track your credit more regularly, Credit.com’s free Credit Report Card is an
easy-to-understand breakdown of your credit report information that uses letter
grades—plus you get two free credit scores updated each month.
By Gerri Detweiler – To view the original article click here