Home > Credit Score > Worst-Case Scenario: What Does a Late Payment Do to My Credit Score?

Comments 0 Comments

Missing a single loan payment may seem like a small faux pas, but it can actually do big damage to your credit score, particularly if it’s your first slip-up.

A 30-day late payment can lower a good credit score of 780 by 90 to 110 points, according to a study by major credit scoring model FICO; and an average score of 680 can drop by 60 to 80 points.

In a best-case scenario, you’ll be able to resume good payment behavior and see your score rebound.

“When an account is brought current and is once again reflecting positively on the credit report, the score should immediately begin to rebound and improve over time, as long as there are consistently on-time payments and no balance increases or credit applications,” Barry Paperno, a credit scoring expert who worked at FICO for many years and now writes for SpeakingofCredit.com, said in an email.

Negative information can generally take up to seven years to age completely off of a credit report. (Bankruptcies can take up to 10 years. You can go here to see what a worst-case scenario bankruptcy could do to your credit.) However, Paperno said, a consumer could see their score return to its pre-late-payment days in a few years.

In a worst-case scenario, one late payment will lead to bigger credit woes.

“For most consumers, a single or occasional late payment shouldn’t trigger additional score drops,” Paperno said. “Yet if the late payments continue, multiple late charges can raise a [credit card] balance by enough to also raise the credit utilization percentage — and lower the score further. Eventually, left unpaid, the debt can be assigned to a collection agency and/or lead to a court judgment, each of which can add to the damage.”

Given that payment history is the most important factor among credit scoring models, you’ll want to get ahead of any problems that could arise by missing a bill (or two or three or four).

When to Contact Your Creditor

If you accidentally missed a payment and your history was pretty stellar up until that point, you can contact your issuer to see if they’ll give you a pass and refrain from reporting the incident to the credit bureaus. They may also be willing to waive the late fee.

If you know you’re unable to make payments on a loan indefinitely (or at all), you can contact your issuer to see if you can work out a payment plan.

Settling with the creditor is likely to still affect your credit, but could prove less costly than letting a defaulted loan go to collection or judgment. (You can find tips for negotiating with a creditor here.)

If your credit has already been damaged by a missed payment, you may be able to improve your score by paying down high credit card balances, disputing errors on your credit report and making all future loan payments on-time. You can track your progress as you work to rebuild your credit by viewing your two free credit scores each month on Credit.com.

More on Credit & Debt:

Image: mactrunk

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team