How a Missed Payment Affects Your Credit Score
Missing a payment can happen to anyone. Unfortunately, consequences can add up very quickly when you miss a payment — and financial implications extend beyond simply paying a late fee. Your credit score can take a hit and that negative record can remain on your credit report for years, making future borrowing more expensive.
A single late payment can decrease your credit, but it can begin to recover as soon as you bring your account current and establish a consistent history of on-time payments. Understanding how a missed payment affects your credit score can help you minimize the damage and take the right next steps.
- Most creditors won’t report late payments until you’re at least 30 days overdue.
- If a payment is more than 120 days overdue, the creditor may send your debt to a collections agency and close your account.
- Contact your creditor to ask about repayment options available to you, including any hardship programs.
- If you’re struggling to pay your bills, a credit counselor may be able to help you develop healthy financial habits.
How much a late payment drops your credit score
How much a late payment affects your credit score depends on multiple factors. Your score could drop up to several dozen points to over 100.
Payment history is the most important factor of your credit score, accounting for about 35% of your FICO Score. Missing a payment will cause your score to drop, and the longer you wait to pay, the worse the damage.
Here are the major tiers of credit impact, measured roughly in monthly periods.
| Potential credit impact | What happens | |
|---|---|---|
| Before 30 days | None if you pay at least the minimum payment within the first 30 days. | There’s usually no credit impact, since many creditors don’t report a late payment to the credit bureaus until it’s 30 days late. |
| 30 to 59 days past due | Credit score could drop anywhere from 40 to 120 points. Negative mark on your credit report for up to seven years. | Your missing payment is now considered a delinquency on a past-due account. Your biggest score hit may happen at this point. After 30 days past due, some creditors may report this to the major credit bureaus, while others may offer a grace period for you to get caught up if you contact them to discuss options. If you historically have great credit, a single past-due account can significantly drop your score, although prompt payment can restore your good history relatively quickly. Different models are used to calculate credit scores, so the exact impact will depend on which credit score you look at. While payment history makes up 35% of most FICO Scores, it accounts for 40% to 41% of VantageScores. |
| 60 to 89 days past due | Credit score will drop again, and late fees and interest rates may go up. | After the 60-day past-due mark, you can expect another major hit to your credit score. But if you are able to get caught up at this point, a goodwill letter (explained in more detail below) could be effective in pleading your case to your creditor if you otherwise have a strong history of on-time payments. |
| 90 to 119 days past due | Late fees and interest may continue to increase, and the lender may begin to pursue legal action, such as home foreclosure or repossession of property. | This is one of the most critical phases of delinquency. At this point, your lowered credit score is no longer your top risk — your creditor may be seriously considering sending your debt to collections. It’s important to quickly contact your creditor to discuss your repayment options, even if you don’t have the money on hand just yet. |
| 120 or more days past due | Prepare for potential collections or foreclosure | By this point, many creditors may charge off your account, close it and send your debt to a debt collection agency, which can further decrease your score. Whether your debt is sent to collections before or after 120 days depends on your creditor. |
How long do late payments stay on a credit report?
Late payments can stay on your credit report for up to seven years. Fortunately, credit scores do reflect how much time has passed since your last missed payment. The longer you go without a missed payment, the better your score will be.
What to do if you have missed or late payments
The best way to solve a missed or late payment is to catch up on your minimum payments as quickly as possible, including any late fees.
- If there are extenuating circumstances around your payment: Let your creditor know about financial issues you’re experiencing. You may be able to participate in financial hardship programs that allow you to skip a late fee or temporarily lower your payments. The earlier you contact your creditors about these programs, the better.
- If it’s your first time missing a payment: Some creditors will remove your first late fee, so it may be worth checking if this is an option.
Once you do catch up on your payments, consider setting up automatic payments for your various accounts. This can help avoid future missed payments, so long as you feel sure you won’t overdraw your bank account.
The longer you can avoid late payments, the better it will be for your credit.
If you’re having trouble keeping up with your bills, you can get in touch with a qualified credit counselor to help find solutions.
How to remove late payments from your credit report
In some cases, late payments can be removed from your credit report.
If you believe the late payment report is a mistake, you’re entitled to an investigation. To do that and get that late payment removed, contact the credit bureaus and tell your creditor you want to dispute the error.
There are also goodwill adjustments, where the creditor voluntarily removes a missed payment report at your request, usually to help your credit score so that you can access other loans.
How to write a goodwill letter: Step by step
A goodwill letter asks your creditor to voluntarily remove an accurately reported late payment from your credit reports. There’s no guarantee that such a letter will work, but it’s worth trying if your payment history is otherwise consistent and your missed payment was due to a one-time hardship or oversight.
- First, confirm that the late payment report is accurate. Before writing a goodwill letter, review your credit reports and account records. If the late payment was reported in error, file a dispute with the credit bureau and your creditor instead of requesting a goodwill adjustment.
- Identify the right recipient for your letter. Address your letter to your creditor’s executive customer service department or credit bureau reporting team, sometimes called a credit bureau liaison. Do not send your letter to the general dispute address, since your request isn’t a formal credit reporting dispute; if the late payment is accurate, your letter may be considered a dispute with no merit.
- Explain what happened. Briefly identify the account, the date of the late payment and the circumstances that caused it, such as a medical emergency, temporary job loss or another unexpected event. Keep your explanation factual and concise; focus on circumstances instead of letting emotions take over.
- Show you’ve gotten back on track. Point out that your account is now current and highlight your history of on-time payments before and after the missed payment. Demonstrating responsible payment behavior may strengthen your request.
- Make a clear request. Ask the creditor to remove the late payment from the credit bureau(s) it reports to as a goodwill adjustment.
- Send your letter and follow up. Mail your letter by certified mail or other secured means so you have proof that it was received. If you don’t receive a response within about 30 days, follow up by phone or send a second request.
Frequently asked questions
A late payment will not be forgiven automatically. When a payment is reported as 30 or more days late, it can remain on your credit report for up to seven years.
Some creditors may waive a late fee or grant a goodwill adjustment, but they aren’t required to remove an accurately reported late payment.
Unfortunately, paying your overdue balance as soon as possible will not erase a late payment that’s already been reported to the credit bureaus. Once your account is current, continuing to make on-time payments can help your credit recover over time.
However, an overdue balance that’s less than 30 days late will probably not impact your credit score significantly, since most creditors do not report late payments to credit bureaus until after the 30-day mark.
Yes, late utility or rent payments can negatively impact your credit score, though typicall not directly.
Many utility companies and landlords don’t report routine late payments to the credit bureaus. But your score can take a hit if an unpaid bill is sent to collections — or if your landlord or utility provider reports payment history.
Yes, a late payment will still appear on your credit report because closing an account won’t remove its payment history. If a late payment was accurately reported before the account closed, it can remain on your credit report for up to seven years from the original delinquency date, even if the account has since been paid off or closed.
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