One late card payment: What's the credit damage?

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

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Question Dear To Her Credit,
I’ve always had a really good credit history and credit score. I think I’m in trouble now, though. I recently moved, and assumed I was getting all my bills at my new address, but this one credit card bill got lost somehow, and now it’s past the due date.

What should I do? Can I ask the credit card company to not report this late payment? If they report it anyway, is my credit ruined? – Trisha

Answer

Dear Trisha,
Given how easy it is to flub up, or that missing a payment isn’t even always a cardholder’s fault, it does seem as if the credit scoring models are a bit harsh when a person has just one mistake on their record.

I ran the FICO credit score analyzer, using optimal answers for every question except one missed payment. For every scenario, I assumed two to four credit cards, no current overdue payments, long credit histories and less than $500 current outstanding. Here’s how having one payment over 30 days late affected the estimated score:

  • With no late payments, the estimated credit score range was 775-825.
  • With one late payment in the past six months, and no other changes, the score drops to 680-730.
  • Six months after the one late payment, the score rises to an estimated 695-745.
  • At one to two years after one late payment, the score improves to 735-785.

Using these estimates, you can see that even with an optimal credit history, your score can drop almost 100 points because of just one mislaid bill, or in your case, a bill you never received.

Once you’ve missed a payment, however, all you can do is try to mitigate any damage and try to keep it from happening again.

First, how late was your payment? If you missed the due date by a few days, you can stop worrying. Credit card companies don’t report late payments unless they are at least 30 days overdue.

Mitigating the damage to your credit

You can’t lose anything by asking the bank not to report or remove any negative mark from your report.

Unfortunately, no matter why you were late, the bank’s standard response probably will be that they can’t remove information that is accurate. However, if you are a first offender, the odds of your request being granted are much higher, plus you may be able to get any late fee waived.

If you are applying for a loan soon and are afraid this negative mark will hurt your chances of getting the best interest rate, you can add a note to your credit card file, explaining why the bill was late.

Adding a 100-word written statement to our file won’t help your credit score, however, and in the days of automated loan processing, your note may never be read. A note on your file is probably best used when you are disputing whether a payment was late, not when it actually was past due.

Avoid missing another payment

The most important thing you can do is to avoid another missed payment. Try to automate and simplify your bill paying as much as possible.

One strategy is to use automatic bill payments from your bank to make a minimum payment every month on each credit card you use. When you get the bill, pay the rest of the balance. That way, even if you miss the secondary payment, at least you avoid late fees and possible credit damage.

I also like to have my bills connected to my credit union bill payment system. For all my utilities and credit card bills, I just go to my bill payment page online, see the amounts due and due dates, and click each one I want to pay. It’s easier than remembering to log in to a different payment site for each bill.

It is so easy to miss a payment, and it’s so frustrating. Things can go wrong in so many ways. Don’t be too hard on yourself – nobody’s perfect, and very few people have credit histories that are always perfect.

Keep up your good financial habits that you’ve maintained for years, and move on.

See related: How late payments get reported to credit bureaus, 5 ways to avoid (or deal with) late fees

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Updated: 11-20-2017