Late payments can happen to the best of us, whether it’s due to a job loss, financial crisis, or a financial emergency. Unfortunately, regardless of the reason, they will affect your credit score. 

They won’t stay on it forever, though—and there are ways to both prevent them and minimize the adverse results that they have. Still, you may be wondering—how long do late payments stay on your credit report? Here’s all you need to know about late payments and their effect on your finances.

How Different Entries Affect Your Credit Score

Equifax, Experian, and TransUnion, the three major credit bureaus, compile the data that creditors report. This includes:

• Late credit card payments
• Late student loan payments
• Collection agency activity
• Other missed payments toward debts 

Entries showing late payments, often referred to as delinquencies, remain on your credit report for seven years. This won’t change regardless of whether you pay the past due amount or not.

There is one exception—bankruptcy may remain on your credit bureau report for up to ten years. More precisely, a Chapter 7 bankruptcy will remain for up to ten 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. Hard inquiries stay for two years, while prior loans that have been paid as agreed remain for ten years.

In general, time matters, so a recent late payment will have a more adverse effect on your credit score. This also means that creating newer positive credit report entries can help counter the effects of lingering late payments. Those effects should gradually lessen over the years after the initial report to the credit reporting agency. 

What Is Considered as a Late Payment?

Payments only get reported to the credit bureaus if they are 30 days late. This means that if you are a day, or even a week, late on your payments, it won’t hurt your credit. Don’t forget that 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.

The minimum payment must be received by the due date listed on the statement. 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 or the reporting date:

• Statement date—the date when the bill was created
• Reporting date—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.  

When Does the Seven-Year Period Start? 

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.

Assuming that the past due debt was paid and the account remained current until you had another late payment in August 2014, 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 the same way late payments are—resulting in an additional credit report entry that remains for seven years.

How Does a Late Payment Affect Your Credit?

Payment history is the most important part of your credit score—it makes up 35% of your FICO Score and 41% of your VantageScore. This is why late payments impact your credit score as much as they do.

FICO assesses late payments based on how recently the delinquency occurred, the severity of the late payments, and the frequency of occurrence. Having even one late payment on your credit history can leave a visible mark. Consumers who often have the most significant repercussions from late payments are those with higher credit scores who have not recently been delinquent on payments.

For example, stats show that an average U.S. consumer has a credit score of 716—with a 700+ credit score, you might lose 60–80 points from a late payment on a credit card, installment loan, student loan, or another credit account. In some cases, one late payment may cause your credit score to drop 90–110 points. Consumers with 780+ credit scores might experience a 110-point drop from a single late payment, which can take a while to regain. 

Some sources claim the number could be anywhere between 50 and 120 points, so it’s safe to say that you don’t want to miss a payment regardless of your current credit score.

What Determines the Severity of Delinquency?

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”)

Being 90 days late is worse than being 30 days late, but recovering from a late payment is possible if you pay before the charge-off. If that happens, or if the creditor sends your debt to the collection agency, then it becomes a much more significant issue that will have a more serious impact on your score.

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 you missed a credit card payment or mortgage payment.

How To Minimize the Damage From a Late Payment

Although some harm is unavoidable, there are ways to reduce the consequences of late payments. If you are late on a payment—or if you think you may be soon—here are three things you can try:

1. Pay the minimum as soon as possible
2. Contact the lender
3. Build your credit

Pay the Minimum as Soon as Possible

The first step in curtailing the harm from a late payment involves paying the minimum as soon as possible. For example, if you know you will be more than 30 days late, it’s best to make the payment before reaching the 60-day mark.

After 60 days, if you still haven’t paid the minimum, your interest might increase. This implies being charged even more, which will increase your balance and cause further harm. If you continue missing payments, your creditor may sell your debt to a collection agency.

Contact the Lender

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 card 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.

Build Your Credit

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

CreditStrong 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 CreditStrong 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.

CreditStrong’s program requires no security deposit, generates no hard credit “check” inquiry on your credit report, and is not subject to any prepayment penalties. Take a look at the available account options and give one a try today!

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

How To Avoid Late Payments

Prevention is always better than cure—it’s better to avoid being late on your payments than to deal with damage control later on. If you have never been late—but you’re afraid of forgetting to pay your obligation on time, the best three tips we can offer are:

1. Set up automatic payments
2. Create a reminder
3. Change the due dates

Set Up Automatic Payments

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

An automatic payment option is very helpful for car loans and student loans, which have fixed monthly payments. Many credit cards also have this option—you can usually find it in the app settings, and it allows you to automatically make the minimum payment due, total balance, or any other amount you choose.

The U.S. Department of Education at StudentAid.gov 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.

Create a Reminder

If you don’t want to pay automatically, but you simply want to not forget, you can also opt for receiving electronic reminders from your creditors as the due dates approach. They come in the form of text messages or emails accessible via your phone or computer. There are also free apps you can find online, if this is something you want to manage on your own.

Change the Due Dates

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 improving your organization when managing your financial affairs. Regardless of whether you prefer a more traditional calendar, written personal organizer, or one of the many options that today’s technology offers, having some sort of notification system can only benefit you in the long run.

Why It’s Important Not To Miss Your Payments

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. For that reason, you should adopt good practices, such as:

• Proactively building your credit history
• Checking your credit report annually
• Staying organized

Doing so is guaranteed to benefit your credit score and your financial health in general. 

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

Start Building credit today