Will One Late Payment Wreck My Credit Score?

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You’re looking through your bank statements and realize that you’ve missed a credit card payment. Or money’s tight, so you’ve decided this month’s payment will have to be delayed.

Whether intentional or unintentional, nothing good comes from late credit card payments.

What happens to your credit score?

Depending on your card issuer, it may cut you some slack and give you time to get caught up. Here are a few other potential consequences:

  • Reports to credit bureaus. Once 30 or 60 days have passed, your late payment will be reported to the credit bureaus and will remain on your credit report for seven years.
  • Fees, fees and more fees! Be prepared to get hit with a late-payment fee of as much as $35 as soon as you miss the deadline. You may also be assessed a penalty APR, which will not revert back to normal until six months have lapsed in which you have made timely payments. And please note that this higher APR will still apply even if you are participating in a promotional period with lower interest.
  • Plummeting credit score. Your payment history accounts for 35 percent of your credit score. Unfortunately, the higher your credit score, the more drastic the effect of a late payment, for reasons explained in this myFICO.com post. Sound like a doozy? If you have credit monitoring, clear the haze and navigate your way to the credit analyzer tool to determine the effect of one late payment on your score. You can also check out Credit Karma’s Credit Score Simulator.
  • Lenders beware. If you attempt to apply for credit elsewhere, lenders may hand you a rejection slip because of the potential risk you pose.

What should you do next?

So, you may be wondering what your options are if a payment is late. You definitely want to take the following actions:

  • Get caught up on past-due balances as soon as possible. Having a hard time freeing up funds? Analyze your current spending, eliminate any nonessential expenses, and reallocate the funds to the delinquent balances.
  • Call and plead your case. Emphasize your past responsible payment habits and ask the credit card issuer to remove the late fee and penalty APR. Also, request that they contact the credit bureaus so the information will not appear in your credit file.
  • Disclose financial hardships. If money’s tight and you find yourself cutting it close each month, notify the lender. Many lenders are willing to work out a debt repayment plan so that you can more easily meet your monthly obligations.
  • Get help! Set up a budget and integrate automatic payments and reminders. Check out these resources on our site to help you get started.

Over time, the side effects of a late payment will diminish. I know from experience how painful this can be, as I watched my credit score plummet by 90 points about six years ago because I failed to remit a payment for $12.15. Although it was a billing error and I was certain that no balance existed on the card, I ultimately ended up paying the price even after the fee was reversed.

And even if you are dealing with a company outside of a credit card issuer that has never reported your poor payment behavior in the past, don’t take it as a free pass to continue acting irresponsibly or you may be in for an unpleasant surprise.

Unreported information will not impact your credit score, but beware that different creditors have internal evaluating systems that may consider payment habits when evaluating accounts for lower APRs, credit limit increases, and other perks along those lines.

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