How Long Until a Late Payment Affects My Credit Score?

how do late payments affect credit score

Have you ever forgotten to make a payment on an account by the due date and then panicked about how the late payment might affect your credit scores and a pending loan application? You are right to be concerned. Late payments can be a pretty big deal when it comes to your credit scores. They can potentially drive your credit scores downward very quickly.

You may get by with the occasional slip up or even a strategic payment delay if your monthly funds are tight, but these bad habits can quickly become a very slippery slope.

If you are trying to improve or maintain your good credit in preparation for a mortgage application then you should be especially careful to try to avoid late payments completely. Yet, although late payments can be very dangerous for your credit, the truth is that not every late payment is going to send your credit scores spiraling. This is great news if you are ever accidentally a few days late on a payment because of a simple oversight. In fact, many late payments may never even show up on your credit reports at all.

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Less Than 30 Days Late Does Will Never Show Up

Being a day late or even a week late on a credit obligation will not harm your credit scores. Why not? According to the policy of all three credit reporting agencies (Equifax, Trans Union and Experian) you must be a full 30 days past the due date before a creditor is allowed to report you as being late. The credit bureaus are essentially giving you a 30-day grace period from a credit reporting, and by extension credit scoring. Of course, there may be other consequences such as late fees handed out by your lender whenever your payment becomes even one day past due. The bottom line is that there is no systemic way to report someone as being 1 to 29 days past due. It simply doesn’t exist.

Accounts That are Not Included On Your Credit Reports

It is also worth pointing out that not all of your monthly payment obligations are going to appear on your credit reports. Credit reporting is a voluntary practice and there is no law that obligates lenders or service providers to report your account management history to the credit reporting agencies. For example, utility accounts, mobile phone service and rent payments will typically not appear on your credit reports, at all. And if a creditor or service provider doesn’t report to the credit bureaus, late payments on those types of obligations will not show up on your credit reports, and can’t harm your credit scores.

The only way late payments on these types of accounts might harm your credit is if you go into default and the debt is turned over to a collection agency that does indeed furnish data to the credit bureaus. Of course, if you are late on an account that is not included in your credit reports there may still be other consequences (i.e. late fees, disconnection of services, eviction, etc.), but you might be able to avoid credit damage if you resolve the past due debt in a timely manner and avoid a default situation.

A Word of Caution

Best practices for maintaining a solid credit rating involve the habit of making your payments on or before their due dates. You may get by with the occasional slip up or even a strategic payment delay if your monthly funds are tight, but these bad habits can quickly become a very slippery slope.

If a late payment does appear on your credit reports it can remain there legally for a full seven years, according to the Fair Credit Reporting Act. Even slight late payments are best avoided all together if you want to preserve the great credit scores that you have undoubtedly taken great care to earn.