Payment history accounts for around 35% of your credit score. Even a single late payment reported to the credit bureaus can bring your score down. Plus, that type of negative information can stay on your report for around seven years.
But a couple of late payments don’t necessarily spell doom for your good credit. It is possible to maintain a 700 credit score with late payments on your credit report—you just need to know a bit more about how late payments can affect you.
- Check Your Credit Report for Late Payments
- Understand the Effects of Late Payments
- Use a Goodwill Letter after a Late Payment
- Remove Collection Accounts from Your Credit Report
- Address Your Credit Score with Credit Repair
>> Have inaccurate information on your credit report? Get a free credit report consultation
Check Your Credit Report for Late Payments
Before you address late payments, you need to find out whether any are affecting your credit history and score. Here are a few ways you can do that:
- Get your free credit score from Credit.com. With a free account, you can review your credit report card, which grades your credit history on all five of the major factors affecting your score. That way, you can see if payment history is where you’re struggling most or if your attention should be on another factor.
- Sign up for an ExtraCredit account.ExtraCredit gives you access to 28 of your FICO® scores and your credit reports from all three major credit bureaus. You won’t find these scores all together anywhere else, and this level of information makes it easier to tell when something such as a late payment is affecting your scores.
- Get your free annual credit reports from each of the three major credit reporting agencies—Equifax, Experian, and TransUnion—so you can see whether they contain late payments. Through April 2021, you can get your credit report from each bureau for free every week due to help manage personal finances during the COVID-19 pandemic.
Understand the Effects of Late Payments
If you’re seeing late payments on your credit profile, don’t fret. Your Credit.com or ExtraCredit account will give you a sense of how much a late payment may be affecting your credit scores, but there are a few basics that will help you better understand the effects of late payments.
How Long Do Late Payments Stay on a Credit Report?
Most negative items, including late payments, can stay on your credit reports for up to seven years. Lucky for your credit score, the negative effect of late payments decreases over time. If you continue to make smart financial decisions—make your other payments on-time, keep your utilization low, and maintain a healthy mix of accounts—you can counteract the negative effects of a late payment. If you have a series of late payments for a single account, the entire series of late payments will fall off your report seven years after the first late payment.
How Much Does a Late Payment Hurt My Credit Score?
How much a late payment drops your score depends on a variety of factors, including your current credit score and how late you are with your payment. The higher your score, the more a late payment will affect you. And the later you are with your payment, the more a late payment tends to affect your score. A payment that’s 30 or 60 days late won’t have as serious an effect on your credit score as a payment that’s 90 days past due.
But the decrease can be as much as 180 points for just a single 90-day late payment. That’s enough to drop your credit score from good to poor and make your future more expensive.
Here’s a summary of how late payments could negatively affect your credit scores, according to FICO’s credit damage data:
- 30 days late: A single 30-day-late payment should not cause much lasting damage and will most affect your score when recent. Being consistently 30 days late, though, demonstrates a pattern of risk and will affect your score more dramatically.
- 60 days late: Recent 60-day-late payments cause more damage, with greater damage caused if you have a habit of paying late.
- 90 days late: Payments made this late can damage your credit scores significantly for up to seven years.
If you continue to miss your payments beyond 90 days, the following records might also harm your credit score:
- Charge-offs: If you fail to make payments on a credit account for 120 days or longer, the creditor may mark the account as charged off. This means they wrote off your debt as a loss. A charge-off is a negative notation on your credit report because it shows you didn’t pay the account as agreed even if you later pay off the debt.
- Collections: This occurs when your creditor’s collections department or a third party seeks to collect debt that was charged off as bad debt. You still owe the money, and the collections account can be reported on your credit as a separate negative item.
- Repossessions or Foreclosures: Having a home foreclosed upon or a car repossessed are both considered serious delinquencies and lower your credit scores considerably for up to seven years.
Can You Have a 700 Credit Score with Late Payments?
You can still have a decent credit score if you have a late payment in your history. Credit scores are an ever-changing number, which means you can affect them positively with responsible action in the future. If you are late with a payment, do what you can to pay it before it becomes 60 or 90 days late. At that point, it will be very hard to keep your credit score above 700. The older your late payment, the better your options for having excellent credit if you continue to manage it properly.
Use a Goodwill Letter After a Late Payment
Creditors are the ones who decide whether a late payment is reported on your credit report. Although creditors have a general obligation under the law to make true and accurate reports, they also have some leeway to decide whether each late payment should be reported.
Because of this, consumers have a tool called a goodwill letter. This can be used to ask a creditor not to report a late payment or to remove that item from your credit report.
A goodwill letter is exactly what it sounds like: It’s a letter that trades on previous goodwill you might have gained by managing your account properly. Lay out your history with the creditor, explain why you were late, and share your plan for making sure it doesn’t happen again. Then you ask the creditor to remove the item reporting your late payment.
If you have a good relationship with the creditor, they might do this favor for you one time. Plus, it takes only a few minutes and the cost of a stamp to send the letter.
Remove Collection Accounts from Your Credit Report
Some people will tell you that once a delinquent account goes to collections, you can pay the collections agency in return for having that information removed from your credit reports. This is called a “pay for deletion,” and it’s not typically an accepted activity. That’s because collections agencies have contracts with the credit bureaus to report accurate information—otherwise, people’s credit reports wouldn’t accurately reflect their payment histories. Agencies are unlikely to risk their relationships with the credit bureaus by fulfilling a pay for delete request.
However, paying off an account could improve your score. In some newer credit score models, small paid collection accounts do not have a negative effect on credit scores. However, those scoring models are the exception, not the rule.
Address Your Credit Score with Credit Repair
If a collections account is inaccurate, you have cause to request its removal. The Fair Credit Report Act protects your right to a fair and accurate credit report. If you find late payments or collections accounts that aren’t accurate, you can send a dispute letter to challenge the accuracy of the account to the credit bureau with your side of the story. Ask the bureau to investigate the matter and make appropriate edits to your credit file.
You can work with a credit repair service if you’re not sure how to go about this process. These services send letters on your behalf and work with you to ensure your credit report is accurate and as strong as possible given the facts about your financial situation.
Late Payments and Your Credit Score
A single late payment won’t wreck your credit forever—and you can even have a 700 credit score or higher with a late payment on your history. To get the best score possible, work on making timely payments in the future, lower your credit utilization, and engage in overall responsible money management.
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