Q&A: What to Do About a Late Credit Card Payment

Question: I always pay my bills on time, but I recently made a huge mistake. I missed the due date and paid my credit card bill two weeks late. What should I do to keep this from ruining my credit? – Caitlin

Answer: Hi Caitlin,

First, I want to commend you for being proactive. There are, indeed, steps to take that might help you contain – or even eliminate – the damage to your score.

You say you always pay your bills on time and that's awesome. It shows that this late payment is a one-time thing and not the norm. If you also have a good credit score, that gives you power to negotiate and ask for a credit favor from your issuer.

Penalties for late payments depend on how late your payment is. Here's how the categories shake out: 30-days late, 60-days late, 90-days late, 120-days late, 150-days late, or charge off (this means it's written off as a loss at this point).

As you can see, being two weeks late doesn't fall into a category. Does this mean you're off the hook? Not entirely. Most issuers don't report a late payment to the credit bureaus until it's 31 days late, but in reality, they can report it as soon as the due date passes and your account isn't up to date.

So it's important to get on top of this. You can look at your account online to see if you've been charged a late fee. If so, you want to ask your issuer to waive this for you. And here's the big question: Has (or will) your late payment be reported to the bureaus?

Prepare to Call Your Credit Card Issuer

Put down the phone! Before you call, make a list of important points you need to make to persuade your issuer that you deserve a second chance. For instance, include why your payment was late. If you have a good reason for the mistake, you want to make sure they know this.

If your credit card has rewards, then you also want to ask if your rewards are safe. For some cards, a late payment (even a week late) is grounds for forfeiting rewards. Some cards allow you to pay a reinstatement fee, but it doesn't hurt to ask if they'll waive it for you.

There's also the chance that your issuer will raise your interest rate. So you also want to address this possibility when you're on the phone.

Call Your Issuer and Make Your Case

You want to sound calm, but also very concerned that this has happened. Convey to the customer service rep that your score and your relationship with the issuer is very important to you.

Don't freak out if the rep immediately tells you that nothing can be done. Just ask if you can speak with a manager. If the rep says there is no reason to do that, then thank the person, wait five minutes, and call back. You'll get a different rep and just go through the same script. Whomever you speak with, be sure you stress your excellent payment history prior to this incident.

What to Do if Your Request is Denied

Okay, I want you to prepare yourself just in case your issuer won't waive the fee, or worse, has reported it to the bureaus. I'm guessing you have excellent credit since you had a good payment history. Unfortunately, the higher your score, the bigger the fall. I know that doesn't seem fair, but that's the way scores work.

So you might see a big drop in your score. I can't predict the amount of the drop because there are so many other factors involved in score calculations. But according to myFICO.com, a person with a 780 FICO score could see a drop between 90 and 110 points with a payment that's 30 days late.

But before you get completely stressed out, remember that your late payment is less than 30 days delinquent. And most issuers won't even report it. But I'm giving some worst-case scenarios so you don't experience an emotional shock if you're unable to convince the issuer to look the other way.

How to Avoid This in the Future

Try setting up a system that has a backup reminder. For instance, let's say you get text messages from your issuer that a payment is due soon. If your phone is dead or you forget to check messages, this setup has a flaw. Keep the text-message system in place, but add another reminder. For example, get reminders via email. Or set up a recurring message in your Outlook calendar or on Google calendar.

You could also set up automatic payments with your bank. Some folks don't like to do this because they worry about cash flow and are concerned they might overdraw or miss a payment due to insufficient funds. So when you set up a reminder system, consider your own financial circumstances.

If the worst happens and it's reported to the bureaus, just remember the impact to your score decreases every year. So don't let this derail your commitment to financial success. Stay focused and pay all of your bills on time and pay off your credit card bill when you can. You can keep tabs on your progress by getting your free credit score from LendingTree.

Both of these factors – payment history and credit utilization – make up 65 percent of your score. Being diligent in these two areas will help you recover more quickly. You may have suffered a setback, but it's temporary and you'll come back from this.

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