The Impact of Late Payments on Your Credit

Late payments can wreak havoc on your credit score, but understanding their impact and how to mitigate it can help you stay on track.

How Late Payments Hurt Your Score

Payment history is the largest factor in your FICO score (35%). A single payment that’s 30 days late can:

• Drop your score by 60-100 points, depending on your starting score.

• Stay on your credit report for seven years.

• Signal to lenders that you’re a higher-risk borrower, leading to higher interest rates or denials.

The severity depends on how late the payment is (30, 60, or 90 days) and how high your score was initially.

How to Prevent Late Payments

1. Set Up Autopay: Ensure at least the minimum payment is made on time.

2. Use Calendar Reminders: Mark due dates to stay ahead of deadlines.

3. Contact Lenders Early: If you can’t pay, ask for a payment plan or deferral before the due date.

Recovering from a Late Payment

• Pay Immediately: Bring the account current to stop further damage.

• Request a Goodwill Adjustment: If you have a good history with the creditor, ask them to remove the late payment from your report as a one-time courtesy.

• Build Positive History: Consistent on-time payments will gradually reduce the impact of the late payment.

Key Takeaway

Late payments are a major credit score killer, but they don’t have to define your financial future. Proactive habits and quick action can help you recover and maintain strong credit.