Generally, a single late payment will lead to a greater score drop if you had excellent credit and a clean credit history. If you already have poor credit and your credit report shows other late payments, a new late payment could still hurt your score, but it may lower your score by fewer points.
A missed payment remains on your credit report for up to seven years from the date it occurred. The overall impact of the late payment diminishes over time and goes away completely when the missed payment ages off your report.
Your score won’t necessarily jump 100 points simply because a late payment ages off or is removed. Even though a late payment might have originally dropped your score by a good number, the impact of that late payment changes over time. How much your score goes up when a late payment is removed depends on a variety of factors, so you’ll want to continue practicing smart financial habits like making payments on time and keeping your credit utilization low.
By federal law, a late payment cannot be reported to the credit reporting bureaus until it is at least 30 days past due. An overlooked bill won't hurt your credit as long as you pay before the 30-day mark, although you may have to pay a late fee.
How Much Can A Late Payment Hurt Your Score?
The more recent of a late payment you have recorded the more it will affect your score.
Your payment history is the biggest factor in determining your credit score, so it’s imperative that you pay your bills on time whenever possible. If you do make a late payment, there are three factors that determine how much it will affect your credit score.
According to FICO’s credit damage data, one recent late payment can cause as much as a 180-point drop on a FICO score, depending on your credit history and the severity of the late payment.
Your Credit History and Late Payments
The impact of a missed payment on your credit score varies significantly depending on your circumstances. The better your credit, the more you may feel the sting of a late payment. In fact, that 180-point drop mentioned earlier is most likely to happen to an individual with excellent credit who is 90 days late on a payment. Because individuals with good and excellent credit don’t have a history of risky behavior, one mistake sends up a red flag that can drop their score more dramatically.
Individuals with a shorter credit history will likely see a dramatic decrease in their score after a late payment as well. Because there is less information available on your financial behavior, a late payment is a bad sign. On the other hand, individuals with lower credit scores already have a history of risky behavior, so one more late payment won’t drop their score as much.
How Severity Affects Credit
If you missed your credit card payment by one day, you probably don’t need to sweat it. In most cases, lenders and creditors have grace periods that can range from a few days to up to 10 days. Grace periods are meant to account for minor mistakes and lag in mailing or posting payments. If your payment arrives within that time period, the lender may not count it as late.
Most lenders don’t report missed payments until your account is 30 days past due. After 90 days, the effect on your credit score will be even more drastic.
Make sure to read the fine print on your account agreement, though, to know if you have a grace period. And avoid falling into the habit of relying on the grace period. If you’re used to paying your bill five days after the actual due date, you could miss the grace period if you experience a personal emergency. Also keep in mind that interest and fees may still apply during the grace period, even if your payment isn’t reported as late to the credit bureaus.
Use Tools to Help You Make Timely Payments
Avoid late payments by using resources that ensure you make payments on time each month.
Sign up for auto payments. Your lender may offer this option, letting you enter a credit or debit card or checking account and taking payments out of that account each month. The benefit is that you can set and forget your payments, never worrying that they’re late. The disadvantage is that you have less flexibility in when you pay each month, and you have to ensure you keep a balance in your account to cover the charges.
Use apps or phone alarms. Remind yourself to make payments with app notifications that let you know the payment date is arriving soon. Many credit card companies and other lenders offer options for receiving such notifications directly from them.
Make smaller, more frequent payments. If you’re struggling to save enough to cover a large bill each month, pay a portion of what’s owed every week. This can help simplify your budget, though you do need to ensure you’re not being charged convenience fees or other amounts every time you make a payment.
Ask for One-Time Late Payments to Be Forgiven
Life happens, and creditors are aware of this. So if you do find yourself making a one-off late payment, contact your creditor.
Apologize for the late payment, let them know it’s not a normal occurrence for you and point to your previously pristine payment history. Ask the creditor to waive late fees and interest charges as a courtesy and not report the late payment to the credit bureaus. It’s a tool you must use sparingly, but creditors may to oblige if you really do normally pay on time.
Refer to the sample letter below!
Sample goodwill letter
Here’s a template goodwill letter for missed payments on a credit card:
Account Number: [your account number]
To Whom It May Concern:
Thank you for taking the time to read this letter. I’m writing because I noticed that my most recent credit report contains [a late payment/payments] reported on [date/dates] for my [name of account] account.
I want you to know that I understand my financial obligations, and if it weren’t for [circumstance that caused you to miss a payment], I’d have an excellent repayment record. I made a mistake in falling behind, but since then, [description of how your circumstances have changed or how you’ve improved your money management]. Since then, I’ve had a spotless record of on-time payments.
I’m planning to apply for [a mortgage/auto loan/etc.], and it’s come to my attention that the missed payment on my record could hurt my ability to qualify. I truly believe that it doesn’t reflect my creditworthiness and commitment to repaying my debts. It would help me immensely if you could give me a second chance and make a goodwill adjustment to remove the late [payment/payments] on [date/dates].
Thank you for your consideration, and I hope you’ll approve my request.