How Long Do Late Payments Stay on My Credit Report?

Missing a monthly payment can have a long-term effect on your overall credit score. Here is everything you need to know about how long late payments stay on your credit report.

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Adam Moelis
Jun 27, 2022
9 min read

Credit reports are an essential part of your overall financial health. Cash can take you pretty far in life, but credit is how you’ll be able to make the biggest purchases. For example, it’s pretty much impossible to buy a new house without a high credit score. Even buying a new car will require a pretty solid credit report.

The good news is that there are plenty of ways that you can build your credit from scratch. The bad news is that a few mistakes can quickly erase all of your hard work. A few factors can hurt your overall credit score, but none are more damaging than a late payment.

When Is a Payment Considered Late?

Unfortunately, there is no clear-cut definition of what constitutes a late payment. Each lender has its own concept of payment delinquency (the official name of a late payment). Some lenders allow several days as a grace period, while others might have a very strict deadline down to the minute. The most important thing isn’t when a lender considers a payment late but when they report delinquency to the major credit bureaus. 

By federal law, lenders cannot report a late payment until it’s at least 30 days past due. They’re likely to tack on interest fees and late penalties very quickly, but they’ll have to wait to make an official report. If you pay off the balance within 30 days, your credit score should be untouched. If you fail to pay after 30 days, things will start to get very interesting.

Most lenders will notify the credit bureaus as soon as you are more than 30 days late on your payment. You would now owe them two payments and have so far proven unwilling or unable to make the first one. Some lenders out there won’t report a late payment until it’s reached 60 days delinquent. However, this practice is relatively rare in the financial industry, so you shouldn’t count on it.

After 180 days of being late, the lender will usually contact a debt collection agency. The agency will take control of your account and begin taking aggressive actions to collect the balance. Usually, these agencies will flood you with letters and phone calls trying to convince you to repay. In some cases, they might seek a court order to garnish wages or seize assets to cover the balance.

How Damaging Is a Late Payment?

It’s a guarantee that having a late payment on your credit report will cause your score to drop. There isn’t a specific number tied to late payments, but the damage will likely be severe. That’s because payment history is the single most important factor that influences your credit score.

Five different criteria play a role in calculating your credit score. Payment history (whether you make payments on time) accounts for 35 percent of your overall score. The other factors include the amount owed (30 percent), the credit history (15 percent), new credit (10 percent), and credit mix (10 percent).

The overall damage of a late payment will vary depending on a few factors, such as:

  • Your current credit score. If you have an “excellent” credit score, the damage will be more severe than if you have a “fair” score.
  • How long does the delinquency last. A payment made 120 days late will be more impactful than a payment made after 30 days.
  • The number of late payments on your report. A single late payment is nowhere near as damaging as having several of them on your report.

When Does a Late Payment Fall Off of My Report?

Perhaps the worst part about having a late payment on your report is how long it will stay there. According to the Fair Credit Reporting Act, a late payment can stay on your report for up to seven years. The period will start on the day the delinquency is reported and naturally fall off your report when the time has passed.

How Can You Reduce the Impact of a Late Payment?

  • Write a letter to your lender
  • Attempt to negotiate with your lender
  • Dispute errors on your report

Seven years is a very long time to wait for your credit report to get cleared. However, there is some good news: late payment's damaging effects will slowly diminish over time. The damage will never be as severe as the first month that it’s reported. 

As long as you continue making your other payments on time, you can slowly repair the damage to your score. Before you accept your fate and move on, these are a few other ways that you might reduce the impact of late payment:

Write a Letter to Your Lender

Everyone will experience hard financial times occasionally. By writing a letter detailing the reasons for your delinquency, you can appeal to the goodwill of your lender. 

They may empathize with your situation, extend the grace period, and forgo reporting the delinquency. 

Attempt To Negotiate With Your Lender

Loan lenders and other creditors are only interested in receiving their payments. They gain little by reporting your payment as late to credit bureaus. 

Depending on your situation, you might be able to negotiate the total balance you owe. Making a partial payment and entering into a repayment plan is much better than having a late payment get reported. 

Dispute Errors on Your Report

It’s not uncommon for people to encounter errors on their credit reports from time to time. If you have a late payment on your report but have made all your payments on time, it could result from an error. 

You should get into the habit of routinely checking your credit report to ensure that there aren’t any erroneous reports damaging your score.

What Are Some Ways To Avoid Late Payments?

  • Set up an autopay feature
  • Create payment reminders
  • Adjust due dates
  • Use grace periods strategically

The best way to deal with late payments on your credit report is never to avoid them. Here are a few methods that can help you to avoid making a late payment:

Set up an Autopay Feature

Most major banking options will offer the feature of setting up automatic payments to your bill collectors. The money will be automatically withdrawn from your account on the same day each month and transferred to your lender. If you set up an autopay, it might be a good idea to consider enrolling in overdraft protection

Overdrafting your account can lead to many problems on top of your late payment. 

Create Payment Reminders

Sending yourself notifications that a payment is upcoming is an easy way to stay on top of your bills. You can use an app on your phone, sticky notes, email alerts, or anything that will remind you to make a payment. 

The upside of using a reminder is that you won’t have to worry about accidentally overdrafting. But the downside is that you’ll have to take the time to make a payment.

Adjust Due Dates

It can be easy to forget a payment when juggling several of them at a time. Adjusting the due dates on your payments can help you manage payments more efficiently. Some people prefer to pay all their monthly bills on the same day. 

Others might space them out and only pay one or two each week. It doesn’t matter which method you choose as long as you pay them on time.

Use Grace Periods Strategically

The federal law states that a lender must wait 30 days before reporting delinquent payments to credit bureaus. That gives you a little over four extra weeks to come up with the money to pay your balance. 

If times are tough, you might have to allow a payment to go a few days late so you can pay off one a few weeks overdue. Obviously, this move is highly risky and should only be attempted when you’re truly desperate.

Let Yotta Help You Build Your Credit

The consequences of late payments on your credit report can be severe and last for a long time. However, there are plenty of ways to rebuild your credit despite having delinquency on your report. One of the most effective ways is to open up a Yotta account and take advantage of the Yotta Credit Card’s benefits.

Yotta reports to the credit bureaus every time you use your Yotta Credit Card to make a purchase. You’ll be able to improve your score slowly just by making everyday purchases. One of the most helpful features is that the money in your Yotta account acts as your credit limit. 

The money in your account is automatically transferred to cover the balance of your Yotta Credit Card. So there’s zero risk of making a late payment, overdrafting your account, or going into credit card debt.

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Visit Yotta today to create your account and make your first deposit. You can start to rebuild your credit while being given a chance to win the $10 million jackpot.

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