How late payments get reported to credit bureaus
Barely late? Don't worry. Late fees are immediate, but you have time before score damage
By Barry Paperno | Updated: June 30, 2016
Speaking of Credit
Dear Speaking of Credit,
If you are two or three days late on a payment, and you are trying to get a home loan, will the bank look at this? This is an every month thing after the due date. -- Joseph
If you're only a few days late, or even 29 days late with that payment, you'll be glad to know your mortgage lender won't be aware of it. Being barely late on your credit card payment won't be reported to the credit bureaus. You have to be late for about a month before a card issuer will report you to the credit bureaus as delinquent.
You are, however, charged a hefty late fee anytime you miss the due date, as you might already know all too well if indeed "this is an every month thing."
So, just how late does a late payment have to be before showing up on your credit report as a delinquency? There are two key dates each month that determine when a late charge is assessed, a payment is considered past due and when the account is reported -- whether positively or negatively -- to the credit bureau: the due date and closing date.
This is the date, typically about 25 days after the prior closing (or statement) date, by which your minimum monthly payment must be received to avoid a late fee, and is most likely the date you've been missing by a few days each month. Yet despite consistently paying after the due date and incurring a late fee, your account has probably been reported to the credit bureaus as "current." That's because the designation of a past-due payment for late fee purposes is different from the guidelines for reporting an account as past due to the credit bureaus.
Closing (statement) date
The closing (or statement) date falls on the same date each month and marks the beginning and end of the time frame for all account activity, such as charges, payments and adjustments, to be recorded onto the monthly statement. While a payment made after the due date and before the next closing date, as you've been doing, won't appear as delinquent on the next statement, the late charge will. If the payment not only misses the due date, but also the next closing date, the statement will indicate that payment as past due.
Reporting to the credit bureaus
Each month, information such as the card's balance, credit limit and payment status is taken from your latest billing statement and reported to the credit bureaus on or shortly after the closing date. This information is then used in the calculation of your credit score the next time it's requested. But what's not always reported to the credit bureau each month, though it may be reflected on your statement, is the past due status of the account. As such, your statement could show a past due payment at the same time the account is reported to the credit bureaus as current.
To address your question more specifically, an account is reported to the credit bureaus as past due when the minimum payment for one month fails to be made by the second closing date following the initial due date. In other words, not only do you have to miss the first and second due dates, but you also have to miss the closing date following that second due date.
Sound confusing? If so, the following scenarios should help illustrate how due dates and closing dates can determine the reporting of an account's payment status to the credit bureaus, which, considering that payment history makes up about 35 percent of your FICO score, can mean the difference between future credit approval and denial:
|HOW CLOSING DATES, DUE DATES AFFECT CREDIT WHEN PAYMENTS ARE LATE|
|A FEW DAYS LATE: Payment due Jan. 25 is made Jan. 28|
|Date||Jan. 1||Jan. 25||Jan. 28||Feb. 1|
|Event||Closing date||Payment due||Late payment received||Closing date|
|Credit consequence||Statement shows account current; next payment due Jan. 25; account reported to credit bureaus as current.||January payment not received; late charge assessed.||Account now considered current.||Statement shows account current; next payment due Feb. 25; reported to credit bureaus as current.|
|LATE: Payment due Jan. 25 is made Feb. 2|
|Date||Jan. 1||Jan. 25||Feb. 1||Feb. 2|
|Event||Closing date||Due date||Closing date||Late payment received|
|Credit consequence||Statement shows account current; next payment due Jan. 25; account reported to credit bureaus as current.||January payment not received; late charge assessed.||Statement shows account 30 days past due; next payment due Feb. 25; reported to credit bureaus as current.||Account now considered current.|
|VERY LATE: Payments due Jan. 25 and Feb. 25 are not made until March 2|
|Date||Jan. 1||Feb. 1||March 1||March 2|
|Event||Closing date||Closing date||Closing date||Late payments received|
|Credit consequence||Statement shows account current; next payment due Jan. 25; account reported to credit bureaus as current.||Statement shows account 30 days past due; next payment due Feb. 25; reported to credit bureaus as current.||Statement shows account 60 days past due; next payment due March 25; reported to credit bureaus as 30 days past due.||Account now considered current.|
To summarize the message in these examples, as long as you can keep from missing more than one payment in a row, not only will your account consistently be reported to the credit bureaus as having been paid on time, but your score will continue to look favorably on your recent payment history and your mortgage lender will be none the wiser.
See related: How common credit mistakes affect scores
Meet CreditCards.com's reader Q&A expertsDoes a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.
- No credit? Unpaid debts can still be sent to collections – You can be sent to collections over unpaid debt even if you don't have any credit. While it will damage your score, there are steps you can take to put your credit standing on the right foot ...
- Loan can boost score faster than balance transfer deal – If you have several cards with high credit utilization ratio and want to lower borrowing costs while raising your credit score, a personal consolidation loan can be a better option than a balance transfer ...
- Is credit card paid off 10 years ago lowering my score? – An old card that was paid off on time contributes positively to your credit score. Instead of trying to delete it from your report, consider reactivating and using it to maximize its scoring benefits ...