Categories: Credit 101

How Late is Too Late for Missed Payments?

It can happen to anyone. You get busy with work, school, or family, or maybe you take an extended trip or vacation. Next thing you know, you’re staring at a late fee for that credit card bill you simply forgot to pay.

Immediately, you start to panic. A missed payment! Now your credit will be in ruins for years. Right?

Not necessarily. In general, both the credit and financial impacts of a late or missed payment will depend on exactly how late the payment is received. Payments that are only a few days past due may incur a late fee, but they won’t actually impact your credit score.

Payments Aren’t Delinquent Until the 30-Day Mark

If every payment made a day or three past the due date were reported to the credit bureaus, it’s likely the agencies would simply be mounds of paperwork with offices somewhere in the middle. After all, even the most organized person can miss a bill by a few days now and then.

The fact of the matter is that missed payments need to be at least a full billing cycle — generally considered to be 30 days — past due before they’ll show up on your credit reports.

So, if your bill is due on July 5, for example, and you forget to pay until July 13, you’ll likely see a late charge, but you shouldn’t see any credit score impacts. However, if you fail to pay your bill before the next due date — August 5, in this example — then your creditor will be able to report the payment as delinquent to the bureaus.

Degrees of Delinquency

Once your missed payment hits delinquent status, it can show up on your credit reports. At this point, you’ll likely start feeling the negative impacts to your credit scores.

And it will only get worse from here if the bill continues to go unpaid.

That’s because there are degrees of delinquency, and the more delinquent your payment becomes, the likelihood of more damage it will do to your credit scores. Creditors typically report late payments in a specific category based on the length of time they’ve been delinquent.

30-Days Late
60-Days Late
90-Days Late
120-Days Late
150-Days Late
Charge-Off

Each new category comes with more extreme credit score impacts — and, likely, more late fees and interest fees, depending on the type of account. A 90-day delinquent debt is worse than one that is 30 days delinquent, and an account that is 150 days delinquent is on the cusp of default.

Once your account is 180 days past due, it is generally considered to be a loss by the creditor and charged off, which basically means the creditor moves it from the “expected revenue” column to the “loss” column.

Once it hits charge-off status, your account will be closed by the creditor. The debt will then likely be turned over to an internal collection department or sold to a third-party collection agency.

The account will also be reported to the credit bureaus as a charge-off or default and could show up on your credit reports. Defaulted debts can cause your credit score to drop by dozens of points, and the higher your score started, the farther it will fall.

Other than the potential for credit damage, the most important takeaway here is that you have up to six months to get your account current before a charge-off to avoid default. The best way to go about this is often to contact your creditor directly to work out some sort of payment plan.

Avoiding Late Payments

Of course, the absolute best way to avoid credit damage from late or missed payments is to avoid missing the payment in the first place. While this may be easier said than done, a variety of tools exist that can make it easier to stay on top of your bills.

The simplest solution for many people may be to set up automatic bill payment through their checking or savings account. Check with your financial institution but most offer this service free of charge or for a minimal fee. Most banks allow automatic bill payments, and they can typically be set up and customized online through the online banking portal or your mobile banking app.

Another way to help avoid late or missed payments is through the use of third-party budgeting and personal finance software. Dozens of options are available for both desktop and mobile devices that can include tools like transaction tracking and payment reminders.

Disputing Incorrectly Reported Late Payments

Nobody’s perfect, not even the credit bureaus, so, in rare cases, you may wind up with an incorrectly reported late payment on your credit reports. This can lead to credit damage and higher rates and fees that you really don’t deserve, so it’s important to address these mistakes — and any other mistakes, for that matter — as soon as possible.

Depending on the complexity of your issue, you may choose to file the credit report challenges yourself. You’ll need to file a separate challenge for each credit bureau where the mistake is reported.

If your credit reports have multiple issues, the above seems like a lot of work, or you simply feel more comfortable hiring a professional, you can find a reputable credit repair company to help you work to fix your credit reports. Be sure to thoroughly research any prospective companies before getting started.

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Ashley Dull