Even barely late payments can impact your credit score
Credit Score Report
Dear Credit Score Report,
If a payment is late, but by fewer than 30 days, how will
that affect my credit score? I mean, if the payment is not done on the due
date, but is two or three weeks late, does that affect the score anyway? Also
will I be reported to the credit score companies for a payment that's less than
30 days late? Thank you. -- Adriana E.
Following any late credit card payment, the possible damage
to your credit score depends on the lender -- and on you.
Although it may be fewer than 30 days late, the bank could
still report your missed payment to the credit reporting agencies (CRAs). Whether it gets reported depends on the card
issuer and your own borrowing behavior, experts say. According to FICO, creator
of the most widely used credit scoring model, "not all lenders report late
payments that are 30 days late," says Barry Paperno, consumer operations manager at myFICO.com. "Some hold off on reporting an account as delinquent
until it reaches 60 days late. In this situation, a 30-day late will have no
impact on the score, since the credit report will show no evidence of that late
But your lender isn't the only factor. The other key
consideration is whether you've generally been a responsible borrower. "Card
companies likely take into consideration your past payment history when
deciding whether to notify the CRAs [credit reporting agencies] about a late payment. If this is an
anomaly, they may let it slide. If it's a common occurrence, they may be
quicker to report you," says Lauren Bowne, staff attorney at San
Francisco-based consumer rights group Consumers Union.
Think about how you've repaid the bank in the past. How
often (and how recently) have you made other late payments? If you're not sure,
scanning your credit reports for delinquencies should jog your memory. Making a late payment may
be out of character for you, but it can still be damaging. Depending on your
current FICO score, a single 30-day late payment can drop your FICO score by 60
to 110 points. (For more on this topic, see my story "FICO reveals how common credit mistakes affect scores.")
That drop can also follow a payment that's fewer than 30
days late, depending on when your bank reports your delinquency. "Be aware
that when it comes to the reporting of late payments on credit reports, a
payment that's late by one to 30 days is considered '30 days late,' late by 31
to 60 days is considered '60 days late,' etc.," says FICO's Paperno in an
e-mail. "As a result, any payment made up to 30 days late will be treated as a '30-day late' by the FICO score."
Credit bureaus report late data differently, says Norm Magnuson, spokesman for the Consumer Data Industry Association, the trade group for the bureaus. The bureaus don't label a late payment as 30 days late unless it's 30-59 days late. "Therefore, Adriana E. would not be reported as 30 days late if she paid the bill 2-3 weeks following the due date," he says.
Reporting just after the payment due
date is unusual. "Most lenders report accounts as late when a payment is
not received by the next due date. In other words, you aren't just late, but
have totally missed the payment for that month," says Maxine Sweet, vice
president of public education for credit bureau Experian.
Therefore, your wallet is likely to feel the damage before
your credit score does. "She'll still be hit with a late fee, for
sure," says Ruth Susswein, deputy director of national priorities for
Consumer Action, a nonprofit consumer advocacy group based in Washington, D.C. And as with the reporting of that late payment
to the credit bureau, the bank may be more forgiving if you've been a good
customer. To see if they'll revoke the late fee, give your card issuer a call
and let them know you've been a long-standing customer who made a one-time
error (assuming that's all true).
Aside from contesting late fees, there's another good reason
to pick up the phone. While it sounds like you'll be able to make a payment
shortly, if personal problems (such as unemployment or health issues) are
making it tough to come up with the money, be sure to let the bank know. Ideally,
the card issuer will work with you to create a debt payment plan that's beneficial to both parties and prevents further damage
to your credit score.
Even a single late payment is bad for your credit score, but
rather than worrying about an isolated blunder, be sure to keep your finances
in order from now on. "A one-time two or three week late payment will
probably not drastically affect your credit score, but repeated late payments
will definitely have a more significant effect, even if you are late by only a
few days each time. A pattern of lateness is worse than a one-time
mistake," says Consumer Union's Bowne.
By taking a more holistic approach to your finances, your
credit score will be better protected against one-time mistakes -- and more
able to recover quickly if you do run into trouble. FICO recommends that after catching
up on this card payment, you pay more attention to your borrowing as a whole: Avoid
making late payments, keep debt levels low and maintain a lengthy credit
history. "Generally speaking, the better the overall credit picture, the
sooner the recovery," Paperno says.
See related: Survey: Despite predictions, credit card annual fees haven't returned, FICO reveals how common credit mistakes affect scores, Negotiate debt payment plans before disaster strikes, Credit card reform arrives in the form of the Credit CARD Act, Responsible borrowing can protect credit score from limit cuts
Jeremy M. Simon is a former CreditCards.com reporter who wrote about credit scoring, economic data, credit card crime and other issues. He is based in Austin, Texas. He is a graduate of Vassar College and has previously worked for Thomson Financial in New York City, where he wrote about the stock markets, and Texas Monthly, as well as several publications in Austin.
Updated: June 21, 2011