How long do late payments stay on your credit report?

Credit & debt

If you have loans or credit cards, you probably have to make payments on them every month. Staying up to date with your payments helps you earn a high credit score and show lenders that you’re trustworthy.

But even when you’re trying to make all your credit payments on time, sometimes you may miss one. Maybe your schedule gets busy and you forget the due date. Or maybe you’ve had some financial difficulty and you’re temporarily short of money.

Even a single late payment can lower your credit score. In this article we’ll look at what late payments mean for your credit, and how you can avoid being late with your payments. 

Here’s what we’re going to cover:

  • Why do late payments matter?
  • What happens if I’m late making a payment?
  • How long do late payments affect my credit score?
  • Can I have a late payment removed from my credit report?
  • How can I prevent late payments?
  • Oportun: Affordable lending options designed with you in mind

Key takeaways:

  • Staying up to date with your payments helps you earn a high credit score and show lenders that you’re trustworthy.
  • Your payment history accounts for the largest portion of your credit report. Even one late payment on a loan or credit card can lower your credit score.
  • Once it’s been reported to a credit bureau, a late payment can affect your credit for up to seven years. Fortunately, the impact of a late payment decreases over time.
  • Setting up calendar reminders or having your bills paid automatically can help you avoid being late with payments. If you’re short of money, you may want to call your lender and try to work out a payment plan.

Why do late payments matter?

Your payment history accounts for the largest portion of your credit report. It counts for 35 percent of your FICO® credit . Even one late payment on a loan or credit card can lower your credit score.  

What’s the difference between credit history, credit report, and credit score?
Simply put:

Your credit history is the details of your past and present credit use

Your credit report is a written or digital record containing this information

Your credit score is a three-digit number based on this information

 

The higher your credit score, the better. Good credit standing means that a lender can trust you to make payments on time. A low credit score can make it more difficult for you to buy a house, take out a loan, or get a credit card.

Any late payments currently listed on your credit report will affect your credit score. After a late payment is dropped from your credit report, it won’t count against your credit anymore.

What happens if I’m late making a payment?

If you miss a payment, you’ll want to make it up as soon as possible. The later a payment is, the more damaging it can be for your credit score.

If you make up the payment within 30 days, it won’t appear on your credit report, although your lender may still charge you a late fee and extra interest.

When a payment is 30 days past due, your lender can inform the credit bureaus. Once they list the late payment on your credit report, it can start affecting your credit score.

A payment that is 90 days past due is worse for your credit score than a payment that’s only 30 days past due.

After 180 days without a payment, your lender may decide to close your account and charge off the late payment as a loss. A charge-off can have a significant impact on your credit score. And remember that even after a charge-off, you still owe the money.

One of the most serious consequences for not making payments is if your lender decides to hand over your account to a debt collection agency. Payments sent to collections will dramatically lower your credit score. You want to avoid this situation if it’s at all possible.

How long do late payments affect my credit score?

Once a late payment is listed on your credit report, it can stay there for seven years. That’s a long time. However, the impact of a late payment decreases with time. Recent late payments affect your credit score more than late payments from years ago.  

Several other factors determine the impact of a late payment. If the payment amount is large, it will count against your credit score more than a small payment would. If you frequently miss payments, or are late paying more than one credit account, you can expect larger drops in your credit score. And if your credit score is high, a late payment will have more impact than if your credit score was low to begin with.

Can I have a late payment removed from my credit report?

Now that you understand how late payments affect your credit score, you may be wondering if it’s possible to get them removed from your credit report before seven years is up.

If you believe the late payment was reported in error, you can dispute it with the credit bureaus (Equifax, Experian, and TransUnion). Lenders do sometimes make mistakes in reporting late payments.

You can file your dispute online, by mail, or over the phone. You may be asked to provide documentation that proves the late payment listed is not accurate. After that, the credit bureau is required to investigate and act on your dispute within 30 days.

If the late payment was reported accurately, however, it will probably stay on your credit report for the full seven years. The best thing you can do for your credit score is to make all your payments on time, every time.

How can I prevent late payments?

What’s the best way to avoid being late with your payments? Here are a few strategies you may want to try. 

Create calendar reminders

If you’re late making payments simply because you forget, calendar reminders can help. Setting up digital calendar alerts for your payment due dates and amounts can help you remember due dates and make payments on time even when life gets busy.

Set up automatic payments

Many businesses offer automatic payment services for your recurring bills. When you set up automatic payments, the amount you owe will be withdrawn from your bank account each month on a specific day. You don’t need to worry about making payments manually anymore.

But you do need to be sure there’s enough money in your bank account to cover these withdrawals, or at least the minimum payment required. Otherwise, you could end up being late with your payment and also owe overdraft fees to your bank.

Contact your lender if you’re struggling financially

If you can’t afford a payment, it’s always a good idea to call your lender and let them know before the due date arrives. Your lender may be willing to work out a payment plan with you. If you agree to the plan, you could avoid having a late payment on your credit report.

Oportun: Affordable lending options designed with you in mind

Now that you understand how late payments affect your credit score, you can learn about how Oportun may be able to help you if you’re looking for affordable credit options.  Visit our homepage to learn about:

  • Personal loans
  • Credit cards
  • Secured personal loans
  • And more!

 

Sources:

FICO. What’s in my FICO® scores?

FICO. Changing the score

Experian. What is a charge-off?

Experian. Collections on your credit report

Experian. How long do credit report disputes take?

 

The information in this site, including any third-party content and opinions, is for educational purposes only and should not be relied upon as legal, tax, or financial advice or to indicate the availability or suitability of any Oportun product or service to your unique circumstances. Contact your independent financial advisor for advice on your personal situation.

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