Late payments remain on your credit bureau report and influence your credit score for seven years. Entries showing late payments remain for the duration, regardless of whether you pay the past due amount or not.

Fortunately, there are ways to improve your overall credit profile to offset the adverse results that late payments have on your credit score.

Equifax, Experian, and TransUnion, the three major credit bureaus, compile the data that creditors report. Most negative information such as late credit card payments, collection agency activity, and other missed payments toward debts remain on your credit report for seven years.

Bankruptcy is an exception that may remain on your credit bureau report for up to 10 years. A Chapter 7 bankruptcy will remain for up to 10 years, while a Chapter 13 bankruptcy generally remains for seven years.

Positive information such as current credit card accounts in good standing stays on your credit report as long as they remain active and prior loans paid as agreed remain for 10 years. 

Creating newer positive credit report entries can help counter the effects of lingering late payments.

In general, a recent late payment will have a more adverse effect on your credit score. The impact of the late payment should gradually lessen over the years after it was initially reported to the credit reporting agency.

What Is Considered as a Late Payment?

Keep in mind that payments only get reported to the credit bureaus if they are 30 days late. So if you are a day or even a week late on your payments, it won’t hurt your credit.

(That being said – fees and penalties usually accrue for paying late!) 

According to the Consumer Financial Protection Bureau (CFPB), credit card payments sent via mail not received before 5 p.m. on the due date are deemed as late.

If the payment is made through the mail and the due date falls on a Sunday, holiday, or other days without mail service, the deadline is 5 p.m. on the next business day. The extra 24 hours generally does not apply to payments made electronically.

Capital One explained that the minimum payment must be received by the due date listed on the statement and partial payments that are below the minimum amount or any transaction returned for insufficient funds following the due date are also considered late.

The payment due date should not be confused with the statement date, which is typically the date when the bill was created, or the reporting date, which is the date that the creditor sends the latest account information to the credit bureaus.

Auto loan payments are generally considered late at midnight after the payment due date. Many auto lenders allow for a 10-day “grace period” before a payment is considered late, after which late fees are applied and vehicle repossession becomes possible.

Always clarify what constitutes a late payment with your particular lender for credit accounts.  

When Does the 7 Year Period Start? 

Late payments, often referred to as delinquencies, will typically remain on your Transunion, Experian, or Equifax credit report for seven years. The seven-year period begins on the original delinquency date, which is sometimes called the “date of first delinquency”.

The entire account might not be deleted if the account was subsequently brought current after the initial missed payment. For example, if you missed a payment on a credit card debt account in January 2014, that would be removed in January 2021 by the credit reporting company.

Further, assume that the past due debt was paid and the account remained current until you had another late payment in August 2014. Here, the missed payment in August 2014 starts a new seven-year period that ends in August 2021.  

If a credit card account has been delinquent for 180 days, a credit card company will formally close or “charge off” the account. A charge off is typically reported by the creditor like late payments are — resulting in an additional credit report entry that remains for seven years.

How Does a Late Payment Affect Your Credit?

Having even one late payment on your credit history can significantly hinder your credit score. For example, a consumer with a 700+ credit score might lose 60 to 80 points from a late payment on a credit card, installment loan, student loan, or another credit account.

The largest single category that influences your credit score is payment history, accounting for up to 41% of your VantageScore 4.0 and 35% of your FICO score.  Late payments are a key component of your payment history.

FICO assesses late payments based on how recently the delinquency occurred, the severity of the late payments, and the frequency of occurrence. More recent late payments are generally more damaging compared to those that occurred several years ago.

The severity of delinquency is based on how late the payments actually are. Per FICO, the common stages of delinquency that may appear on your credit report include:

• 30 days
• 60 days
• 90 days
• 120 days
• 150 days
• Charge Off (written off as “bad debt”)

In some cases, one late payment may cause your credit score to drop from 90 up to 110 points. The amount (balance) of the past due payment may also impact the severity of the drop, meaning that larger mortgage payments are likely to have more adverse results.

The type of credit account alone should not make a difference. For example, if both payments were $300, the effect on your credit score should be the same regardless of whether a credit card payment or mortgage payment is involved.

Consumers that often have the most significant repercussions from late payments are those with higher credit scores that have not recently been delinquent on payments.

For example, consumers with 780-credit scores might experience a 110-point drop from a single late payment. Meanwhile, a consumer with a poor credit score and a history containing several payments might only incur a 60 to 80-point drop in their score.

How to Minimize the Damage From a Late Payment

The first step in curtailing the harm from a late payment involves paying the minimum as soon as possible. For example, if you are 30 days late, it is best to make the payment before reaching the 60-day mark.

Promptly contact the lender to discuss the situation. For example, if you encountered an unexpected calamity that prevented you from making a car payment, speak with the lender regarding a possible short-term deferral of payments or another payment arrangement.

The same proactive communication applies to a late credit card payment. Even some of the best credit cards from issuers, such as Discover and Citibank, might waive late fees or extend other courtesies for customers that have otherwise kept their account in good standing.

One of the best ways of countering the negative effects of a late payment or another adverse credit entry involves counteracting it using credit repair or credit building strategies. Among the best options is obtaining a credit builder loan from Credit Strong.

Credit Strong is a brand of credit building products and services offered by Austin Capital Bank, a Texas-based FDIC-insured institution. A credit builder loan is a non-traditional variation of an installment loan where you initially borrow a sum of money that will be repaid by making fixed monthly payments.

A Credit Strong credit builder loan differs from a ‘traditional’ personal loan, since the borrowed loan funds are immediately deposited into a secured savings account where it remains for the loan’s duration. The borrower then makes monthly payments to repay the loan, which are promptly reported to the major credit bureaus. When the loan is paid off, the loan proceeds are released to the borrower.

Credit Strong’s program requires no security deposit, generates no hard credit “check” inquiry on your credit report, and is not subject to any prepayment penalties.

Aside from likely boosting your credit score, a credit builder loan also rewards you after all the payments have been made by releasing the loan funds to you in addition to any accrued interest on the deposit account..

How to Avoid Late Payments

Consider enrolling your credit accounts in an automatic payment “autopay” option. Most banks and other financial institutions allow for making automatic electronic payments from your checking account.

An automatic payment option is very helpful for car loans and student loans, which have the same fixed monthly payment. Many credit cards also have these options with settings that automatically make the minimum payment due, total balance, or another amount you choose.

The U.S. Department of Education at StudentAid.gov currently offers incentives for those who enroll in an automatic debit program. For example, borrowers paying through Direct Loans are eligible for a 0.25% interest rate deduction for signing up.

Use available options for receiving electronic reminders as due dates approach such as via text message or email accessible by your phone or computer.

Another possibility involves changing the payment due dates on your accounts. In many cases, it is possible to synchronize your payment due dates so that you can pay all your bills at the same time rather than tracking multiple dates throughout the month.

Here, the overall key involves committing to becoming better organized when managing your financial affairs. Regardless of whether you prefer a more traditional calendar, written personal organizer, or the many options that today’s technology offers.

Consumers with excellent credit scores have generally established a pattern of responsible credit use. Your payment history is the largest single factor that influences your credit score because lenders recognize that past behavior is a good predictor of future behavior.

While a single, isolated late payment is unlikely to result in long-term adverse ramifications, having multiple negative credit entries can. Adopt good practices such as proactively building your credit history, checking your credit report annually, and staying organized.

CreditStrong helps improve your credit and can positively impact the factors that determine 90% of your FICO score.

Start Building credit today