Missed a Payment? Here’s How It Affects Your Credit and What to Do Next
Paying a bill 30 days or more past the due date could drop your score and stay on your credit reports for up to seven years. Here's what you can do to help limit the damage.
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On-time payments are the biggest factor affecting your credit score. The difference between a late payment and missed payment can be damaging. It’s important to know where you stand so you can take the appropriate action to quickly bring your account into good standing.
Late payment vs. missed payment
Late payment and missed payment are often used interchangeably, but they have different meanings in the world of credit reporting.
Late payment: A payment made past the due date but within the same billing cycle or month. A late payment is typically not reported to the credit bureaus and your score is not affected if paid before that 30 day window is up.
Consequences of a late payment include:
A late fee.
Penalty rates, such as an increased annual percentage rate (APR) on a credit card.
Missed payment: A payment that is 30 days or more past due.
Consequences of a missed payment include:
The lender typically reports this to the credit bureaus.
It can lower your credit score. The higher your score, the more damage a missed payment is likely to make.
It will stay on your credit reports for up to seven years.
If the account goes unpaid for longer — 60, 90 or 120 days — your account can be sent to collections.
How do I know if I missed a payment?
There are two ways to know if you missed a payment: your lender sends you a notice that your payment is late, or you check your credit reports — which you can request using AnnualCreditReport.com — and see a missed payment. Once you see the missed payment, take action to minimize any damage to your score.
» MORE: Get your free credit report from NerdWallet
What to do about a late or missed payment
Situation | What To Do | Why It Matters | Tips |
|---|---|---|---|
Your payment is less than 30 days late | Pay your bill immediately. Call the creditor to request it waive any late fees. | You’re catching the mistake before the 30 day mark, which means no credit damage has happened yet. | If this is your first late payment, note this for creditors. They’re more likely to waive the late fee. |
Your payment is 30+ days late | Pay your bill immediately. Send a goodwill letter. | The lender has probably reported your payment as late to the credit bureaus, which means your credit has been negatively affected. | Explain your situation clearly in your letter. Acknowledge your mistake and ask the lender for forgiveness. Send via certified mail. Not all lenders will remove the mark, but it’s worth trying. |
Your payment was incorrectly reported as late to credit bureaus | Dispute the error with the credit bureaus. Call your lender to explain. | Errors can hurt your credit, and it’s free to dispute them. | You can file disputes by mail, online or by phone with each major credit bureau. Keep records and check back a month after the bureaus’ response to make sure change has been made. |
How can I avoid late payments?
Focus on preventing problems with these strategies:
Many credit card issuers allow you to select payment due dates. You may want to stagger due dates or group them together to align with paydays to help you remember.
Set up text alerts or calendar reminders about bills due in a few days. If you need more than one, set up multiple electronic nudges.
If you can do so without risking overdrafts, consider using automatic payments to pay at least the minimum as soon as a statement is issued. You can go online later to pay more if you want, but this way your account is never late.
Consider making smaller payments on your credit cards throughout the month. Paying down the balance every week or so protects your credit two ways: You've already paid by the time the due date hits, and keeping your balance low relative to your credit limit improves your credit utilization, which is the second-biggest influence on your score.
If you find that your payments are late because you don’t have enough money to pay your bills, consider looking into hardship programs offered by some creditors. They are for people affected by things such as natural disasters, job loss, medical emergencies or natural disasters.
