How Do Late Payments Affect a Credit Score?

How do late payments affect a credit score? A single late payment can drop a credit score anywhere from 60 to 110 points. Late payments stay on credit reports for seven years, but they only damage credit scores for less than two. Any late payments can hurt a credit score, including late credit card payments, loan payments, rent, utility bills and even unpaid library fines.

Late payments hurt good credit scores more than bad ones. More late payments and later payments cause more damage. For more information on how late payments hurt credit scores, keep reading.

List of Late Payments That Affect Credit Scores

Here’s a list of late payments that affect credit scores:

  • Late payments on credit cards
  • Late payments on mortgages
  • Car loan late payments
  • Late payments on rent
  • Taxes paid late or leins

late payment affect credit scoreIn fact, any late payments that get reported to a credit reporting agency will drag down a credit score. Even unpaid library fines can affect a credit score if the library reports them to a credit agency.

The real question is whether or not the creditor will report late payments. According to credit bureau Experian, most credit card companies and utility companies will report a late payment. Many landlords will also report unpaid debts. It’s up to the company or landlord when they report the payments though, and some creditors allow more time than others.

For detailed information about how credit scores work, see our article on what makes up a good credit score here.

Late Payments Hurt Good Credit Scores the Most

what is a good credit scoreAccording to FICO, the analytics firm that makes the software that computes most credit scores, late payments hurt good credit scores more than bad ones.

Someone with a 780 credit score who misses a payment’s due date by more than 30 days can see a 90 to 110 point drop in their credit score. Someone with a credit score of 680 who misses a payment might see their score dip by only 60 to 80 points.

How Do Late Payments Affect Credit Scores?

Credit ScoreDifferent kinds of late payments affect credit scores in different ways, but all late payments that get reported will drag a credit score down. How a late payment affects a credit score depends on whether the payment is less than 30 days late, 30 days late, 60, 90 or 120 days late. Naturally, the later the payment, the worse the effect on the credit score.

In addition to dragging a credit score down by varying degrees, bills that have gone longer without being paid are harder to remove from a credit report. Finally, missed payments for credit cards do less damage than missed home loan or auto loan payments. Below, we show the impact of different degrees of late payments.

How Long Do Late Payments Affect Credit Scores?

Even though late payments stay on a person’s credit report for seven years, each late payment will only affect a credit score for less than two years. For the difference between a credit report and a credit score, see our article here.

According to credit reporting agency Experian, the more recent the late payments, the bigger the damage. Late payments that just got reported to a credit bureau a few weeks ago will hurt a credit score a lot more than one that’s five years old.

The chart below by shows how long it takes a credit score to recover from late payments and other damaging events. VantageScore is a company created by the three credit reporting bureaus Experian, Equifax and TransUnion.

late payments damage credit score vantage

As the chart shows, a missed payment or default will continue to hurt a credit score for somewhere between one and two years.

How Do Multiple Late Payments Affect Credit Scores?

A single late payment can drop a credit score by 60 to 110 points. Predictably, multiple late payments drop a credit score by even more. The biggest credit score damage happens when the lender gives up on the debt.

Although FICO doesn’t release its exact methods for calculating drops in credit scores, the chart below by provides a good general guideline.

late payment credit score drop vantage

How Different Kinds of Late Payments Affect Credit Scores

late payment credit score hurt 30 60We said above that late payments affect high credit scores more than low ones. Similarly, the later the payment, the greater the damage.

This chart by VantageScore shows the different damage caused by different kinds of late payments.

Someone with a good credit score who misses a credit card payment by 30 days might see a 70 to 90 point drop. If the payment reaches the 60 days late mark, their score might drop by 85 to 105 points.

Missed loan payments cause more damage to credit scores, and accounts turned over to collections hurt the worst of all.

Less Than 30 Day Late Payments

credit card tips tricks late paymentsMost often, late payments that are less than 30 days late won’t affect a credit report.

Credit card companies and other creditors use a publication called the Metro 2 Credit Reporting Resource Guide to decide when to report late payments. The guide suggests that companies should provide a grace period of 30 days after the payment’s due date.

However, the 30 day grace period is a guideline, not a rule. A credit card company or other lender could report a late payment only one day after the bill’s due date if they like. Even late payments that don’t get reported have consequences, most often in the form of late payment fees and interest charges.

The good news is, even if a company does report a late payment that’s less than 30 days late, it probably won’t have a very big impact on the consumer’s credit score.

How 30, 60, 90 and 120 Day Late Payments Affect Credit Scores

late payment credit score hurt 30 60Looking at this chart again, we can see that late payments that are 30 days past due will drop a 900 point credit score by as much as 90 points and a 60 day late payment can cause a 105 point drop. Meanwhile, payments that are 90 or 120 days late will drop a 900 point credit score by roughly 100-160 points.

The credit reporting agencies don’t publish exact information about how much damage is caused by 90 or 120 day late payments. However, they do say that an account turned over to a collection agency can cause a drop of 165 to 185 points.

Since accounts generally get turned over to collections after 180 days, it makes sense that 90-120 day late payments will drop a credit score by something lower than 165 points but higher than 100 points.

How 180 Day Late Payments Affect Credit Scores

Once late payments hit the 180 day point, they are generally turned over to a collection agency. Having an account turned over to collections drops a 900 point credit score by 165 to 185 points. It will only drop a 760 point credit score by 105-125 points. If the debt goes unpaid, it will continue to damage the person’s credit score for seven years, though the effect of the damage will gradually lessen over time.

How to Fix Late Payments

late payment affect credit score automatic paymentThe best way to fix late payments is to pay them. The only way to fix the resulting damage to the credit score is to let time work its magic. Most damage to credit scores from late payments will go away in less than two years.

To avoid making late payments in the future, consumers can set up automatic bill payments. Another good idea is getting on a budget to make bills easier to handle.



Recent late payments hurt credit scores the most –