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From the Experts at Credit.com

Late Payment Secrets Revealed

by Gerri Detweiler

Late Payment Secrets Revealed

In the complicated world of credit scores there is one fact that pretty much everyone assumes is true: late payments are bad for your credit scores. Not only are late payments bad, but they are also assumed to be one of the worst things you could do to your scores. The first sign of a late payment on your credit reports signals impending credit doom, right? It turns out that this isn’t necessarily the case after all.

Before we get into the specifics of how late payments affect your credit, it’s essential that you find out exactly how they are affecting your credit. To do that you need to do two things:

  1. Get your free credit score from Credit.com which will explain in detail the factors that are having the greatest impact on your scores, including delinquencies, and what you can do about them.
  2. Get your free annual credit reports from each of the three major credit reporting agencies, Equifax, Experian, and TransUnion so you can see whether your reports contain late payments.

Credit scores are used by financial institutions, insurance companies and utility companies as an efficient way to predict how risky a customer you will be. If your credit score is low, it indicates that you are more likely to make late payments or file costly insurance claims. In turn, this means that the creditor is more likely to lose their investment by lending you money. Once you understand that credit scores predict this specific behavior, it’s a lot easier to figure out the best way to manage your credit.

Because scoring systems are so focused on predicting whether or not you’ll go at least 90 days late, surprisingly, 30 or 60 day late payments that occurred long ago are actually not that damaging to your credit scores as long as it is an isolated incident. It’s when your accounts are recently reported 30 or 60 days past due on your credit reports that your credit scores plummet temporarily.

If 30 or 60 day late payments are an infrequent occurrence, they shouldn’t cause lasting damage to your credit score unless they are recent (last two years or so) or 30 or 60 day late payments on a regular basis. In this case, the fact that you are habitually late with your payments will cause long term damage to your credit scores.

It’s a whole new ballgame once you have a 90 day late payment, however. If you have been over 90 days late (even just once), the credit scoring models consider you much more likely to do it again. One 90 day late payment will damage your credit for up to seven years. From a scoring perspective, a single 90 day late payment is as damaging to your credit scores as a bankruptcy filing, a tax lien, a collection, a judgment or repossession. Being 90 days late causes you to be viewed as a possible “repeat offender” and a higher risk to creditors. Here’s a summary of how late payments impact your credit scores:

  • 30 days late – This record will damage your credit scores most when it is recent. The exception is if you are 30 days late often. Otherwise, a single 30-day late payment should not cause lasting damage.
  • 60 days late – Similarly, recent 60 day late payments cause the most damage. Again, the exception is if you are 60 days late often which will certainly hurt your scores. Otherwise, one late payment should not cause long term damage.
  • 90 days late – This record will damage your credit scores significantly for up to 7 years. It doesn’t make a difference whether or not your account is currently 90 days late. Remember, the goal of the scoring model is to predict whether or not you will pay 90 days late or later on any credit obligation. By showing that you have already done so means that you are more likely to do it again compared to someone who has never been 90 days late. As such, your credit scores will drop.
  • 120+ days late – Late payment reporting beyond the initial 90 day missed payment does not cause additional credit score damage directly. However, there is an indirect impact to your scores. At this point, your debt is usually “charged off” or sold to a 3rd party collection agency. Both of these occurrences are reported on your credit files and will lower your credit scores further.

If you continue to miss your payments beyond 90 or 120 days, the following records may also harm your credit score:

  • Collections – Collections are the result of late payments. There are two types of collections; those that have been sold to a 3rd party collection agency or those that have been turned over to an internal collection department. Regardless of which one shows up on your credit reports, your scores will suffer.
  • Tax liens – Tax liens are obviously not preceded with late payments on any sort of account. However, when tax liens are reported on your credit reports they have the same negative impact to your credit scores as any other seriously delinquent account.
  • Repossessions or foreclosures – Having a home foreclosed upon or a car repossessed are both considered serious delinquencies and will lower your credit scores considerably for up to seven years. The assumption normally made by the consumer is “hey, I gave the home or car back to the lender, why are they going to show me as delinquent?” The answer you’ll get from lenders is that you signed a contract with them to buy a home or car and pay it in full over a period of time. You failed to do so therefore they consider you to be in default of your agreement with them and will report this on your credit reports.

Remember, the goal of most credit scoring models is to predict whether or not you will go 90 days past due or worse on any obligation. What’s missing? The scoring models are not designed to predict whether you will default for any specific dollar amount. As such, having a 90 day past due of only $100 is as bad as having a 90 day past due of $10,000. The same goes for low dollar collections, judgments or liens. The dollar amount doesn’t matter. The fact that you paid late is what’s most important in the eyes of a credit scoring model.

Now that our late payment secrets have been revealed, let’s look at what it means to you. You should still avoid making late payments whenever possible. But we now know that one 30 or 60 day late payment isn’t the end of the world. Since 90 day late payments are the real credit score busters, you should avoid a 90 day late payment at all costs.

If you already have a 90 day late payment record on your credit history then your scores are already suffering. Be certain that the information is being accurately reported. If it isn’t then you have the right to dispute it with not only the credit reporting agencies but also with the lenders who reported it. Your goal is to have the item corrected or removed, especially if it is in error. Once removed or corrected your credit scores will immediately recover.

Credit scores are complicated. Fortunately, you don’t need to be a credit scoring genius to improve your own credit score. Using this late payment secret and other credit score information from Credit.com, you can manage your score like a credit industry expert.

Find Out Where You Stand

You can check your credit score each month using Credit.com’s free Credit Report Card. This completely free tool will break down your credit score into sections and give you a grade for each. You’ll see, for example, how your payment history, debt and other factors affect your score, and you’ll get recommendations for steps you may want to consider to address problems. In addition, you’ll also find credit offers from lenders who may be willing to offer you credit. Checking your own credit reports and scores does not affect your credit score in any way.


  • http://dea42.com/ avatar42

    In case anyone else ends up here. Bank of America charged me for a service on a card I was not using so I did not notice the charge till it was over 30 days late. I got them to reverse the charge and disputed the the flag on my credit but almost 7 YEARS later that is STILL listed as impacting my score according the Experian.

    • http://www.Credit.com/ Gerri Detweiler

      Maybe it is time to file a complaint with the Consumer Financial Protection Bureau.

  • http://www.Credit.com/ Gerri Detweiler

    Have you talked with the credit counseling agency that was handling the payments? They may have a relationship with the creditor where they can work with them to reage it. If not, was it the counseling agency’s mistake that it was late?

  • kiki

    Creditor reported me been 30 days late for 6 months- how many points could that be if I correct the issue.

    • http://www.Credit.com/ Gerri Detweiler

      What do you mean by correct it? You mean catch up and pay on time going forward? It’s impossible for me to say how many points that would move the needle, but late payments in the most recent 24 months usually have the most impact.

      • kiki

        I was not late, so I am disputing it as we speak, and it was in the most recent 24 months.

        • http://www.Credit.com/ Gerri Detweiler

          Ah sorry I misunderstood. If those late payments are removed your credit scores will likely increase, and it could be significant since 6 recent late payments can really hurt your credit scores.

          • kiki

            oh ok thanks

  • Cee

    I have an account I had since 2004 never been late until this past month. The company reported me as being late for Jan/ February I’m which that payment is not due until the 28th.
    I disputed this due to incorrect months. However; what kind impact does this have on my score. All my accounts have never been late ever. Thank you for your time…

    • http://www.Credit.com/ Gerri Detweiler

      I’m sorry but this isn’t specific enough for me to understand the situation. Have you checked your credit reports and credit scores? If there are multiple late payments they are probably having a significant impact on your scores, especially if they are recent. Here’s how to get your free annual credit reports.

  • SRM

    I have 30, 60 and 90 day late records for student loans still showing on my report from well over 3 years ago. The more recent details for those same accounts are paid as agreed or no data at all, since I went back to school and the loans are in deferment till after I graduate. My credit score is currently 638. Is it possible to have some of those very old late payments removed in order to improve my score, especially since my most recent payment history has been positive?
    Also, how long are hard/soft inquires supposed to remain on your report?

    • http://www.credit.com/ Credit.com Credit Experts

      Late payments will stay on your credit report for 7 years and 180 days after the account was first reported late. Your positive history can only help.

      Soft inquiries do not appear on your report at all; hard inquiries stay there for two years, but are not generally factored into scores after 6 months.

  • TPL

    I have been told that there were 2 missed payments on my mortgage account back in June & July 2012 – I am in dispute with the bank as they say they contacted me by letter and advised of the consequences of missed payments against my credit rating and I am adamant we never received the letter as they sent in after we had moved house even though the old mortgage was not paid of until the August – we had mail re–direct on but did not receive it at my partners house where we had moved to – where do I stand on this? it is making it difficult to get a joint mortgage

    • http://www.Credit.com/ Gerri Detweiler

      I am sorry I am not sure I understand the situation. You did miss two mortgage payments? And it was because you didn’t get the bills when you moved? And you only found out about this now? I ask because I’m not sure what can be done about this two years after happened. I feel for you because it really does affect your credit scores. But if you forgot to make two payments then you may be stuck with it unless you can get someone there to make a goodwill adjustment. If I’m missing something by all means let me know.

  • rileyrh1

    BoA reported me as 30 days late pymt on an auto loan. I did not make the payment as usual because I traded the car in before it was 30 days late. It was over the xmas/new years holiday so the dealership did not make the arrangements to payoff loan until Jan 7, making it 30 days past due. I completed finacial paperwork with dealership 12/22 w/payoff info & turned the car into them 12/26 expecting that I was no longer responsible for loan at that time. BoA stated it was my responsibility despite trading in prior to 30 late time frame. I have over 15yr relationship with BoA, never late on pymts, always paid more than pymt amount on that loan, have excellent credit, but just downgraded 40 pts because of this. Is there a way to dispute this? Is there a reputable company to help with this?

    • http://www.Credit.com/ Gerri Detweiler

      This is a tricky subject. I have no doubt you are acting in good faith expecting the payment to be made before that last payment was due. On the other hand, the lender will probably tell you that you’re responsible for making those payments until the loan is paid off. Have you tried filing a complaint with the Consumer Financial Protection Bureau?

  • Maria

    Mu husband is in charge of our finances and I recently found out we have been 30-60 days late 9 months out of year in 2014, and 30-180 days late 5 months out of the year in 2012. Will we ever be able to get credit again?!? Or do we have to wait 7 years assuming we are on time from here on…

    • http://www.credit.com/ Credit.com Credit Experts

      You can only start where you are. At this point, if you can catch up and stay current, you’ll have some positive information on your credit report. Here’s more on rebuilding credit:
      How to Rebuild Credit

  • Sha

    My student loan is currently 90 days past due. (Before this my credit was good) They (the loan lender) claims if I don’t pay by the end of the month it will be reported to the Credit Bureaus and go into the 120 days starting the beginning of next month. Since I am already at the 90…should I rack my brain trying to get things paid before entering into the 120..Or is the damage already done and I can go ahead and give myself a month to get other things in order?

    • http://www.Credit.com/ Gerri Detweiler

      I assume this is a federal student loan…? Don’t let it go into default if at all possible. Have you tried getting into Income-based Repayment or Pay as You Earn program? If you can get into one of those programs you may be able to get your payments reduced to as little as zero. Income Contingent Payment could be another possible option.

  • bm4n

    Hello, do you know if good will letters to creditors asking them to remove the late/missed payments are worth it? Also is there a way to request to remove hard inquiries?

    • http://www.Credit.com/ Gerri Detweiler

      It depends on whether you want to make the effort. They don’t always work, but if they do, that’s one less thing to worry about.

      Disputing hard inquiries is probably not worth it. They only affect your scores for a year and they are removed after two.

  • bm4n

    For late or missed payments on student loans that were consolidated, is there anything I can do as far requesting them to be removed. I’ve had my loans consolidated for about 14 months now and every payment has been on time since then, however my credit report stills show the original loans prior to consolidation with 11 missed payments from 4 years ago. Would I be able to send them a good will letter to request for them to the remove it?

    • http://www.credit.com/ Credit.com Credit Experts

      It never hurts to try, but time may be your greatest ally. Late payments have less impact as time passes, and they disappear after 7.5 years. On-time payments will help. And if you have other credit, particularly credit cards, be sure you pay on time and keep balances low relative to your credit limit. Here are some other tips:
      How to Rebuild Credit
      Good luck to you.

  • cassies

    Just wondering if you can tell me..I paid a credit card off in April of 2011 the date of last activity is April of 2011 however it shows a date reported of February 2015 could u please explain to me how a paid off account im 2011 is now showing a date reported in 2015 I am unsure why anything would be reported for this year when the account was paid off 4 years ago

    • http://www.credit.com/ Credit.com Credit Experts

      Have you tried disputing it? And is it now on all three reports? You can get all three reports once a year at AnnualCreditReport.com. Here’s how to dispute errors in your credit reports: A Step-By-Step Guide to Disputing Credit Report Mistakes

    • http://www.Credit.com/ Gerri Detweiler

      Your account is likely still in their system and therefore information continues to be reported. Are you concerned for a particular reason? Simply the fact that it continues to be reported isn’t necessarily negative…

  • cassies

    Also when there is a date reported is that affecting my credit score as well I do not have this credit card any more ,….

  • http://www.Credit.com/ Gerri Detweiler

    Each negative item is another indicator of credit risk. The 90-day late will be counted separately from the mortgage. But either way, you can start to rebuild your credit as soon as your bankruptcy is completed. As negative information gets older, it carries less weight provided you have current on time references on your reports. Please read: How to Rebuild Credit

    • sylviag

      Gerri,
      Thanks for the reply and input.. I am a bit confused.. what do you mean that the 90-day late will be counted separately from the “mortgage”? what mortgage? Sorry I guess you lost me there.

      • http://www.Credit.com/ Gerri Detweiler

        I meant bankruptcy – sorry!

  • Lisa G

    I got 30 day lates on my perfect credit report from Chase bank. Disputing the lates was futile since they were accurate. Its been 3 months and my score has not changed 1 point. How many months before the score will improve with consistent on time payments

    • http://www.Credit.com/ Gerri Detweiler

      It is hard to say as scoring models vary and it depends on all the information in your reports. But as these late payments become older (12 months, then 24 months) they should have less impact provided everything is current going forward.

  • http://www.credit.com/ Credit.com Credit Experts

    Probably so. Be careful to pay all bills on time, and try to keep credit card debt to less than 30% of your credit limit (less than 10% is ideal). You can track your progress with free credit scores from Credit.com. Also, be sure to check your credit reports to make sure all the information there is accurate. Here’s how to get your free annual credit reports. Finally, it would be smart to avoid applying for new credit close to the time you want to refinance.


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