Sometimes a bill payment slips your mind, or you make a late payment on your credit card while prioritizing other expenses. But we know, no matter the reason, a missing credit card payment makes you feel bad because it hurts your credit score!
So, let’s dive in to know how late credit card payments can affect your credit health. Give you the pro tips on how you can mitigate the damage caused by such delays and will share the solution for your search “credit repair near me.”
Let’s get started!
When Does a Payment Mark as Late On Credit Report?
Late payments cannot be reported to the credit reporting bureaus until 30 days are passed as per Federal Law. It doesn’t matter if you have overlooked a bill because you have another 30 days to pay it with a late fee once it is overdue. Your credit history and the data used in calculating the credit scores matter.
How To Know If Your Credit Report Has a Late Payment Marked?
Once a late payment appears on your credit report, you must arrange the credit reports from all three bureaus, i.e., Experian, Equifax, and TransUnion. You can file a dispute if an invalid payment is recorded, which can help you to improve your credit score.
What Happens if You Make a Late Payment?
It depends on the amount of loan that you have taken and the number of days passed after the payment is overdue.
Payment Overdue After 30 Days
If possible, pay off the overdue amount within 30 days to keep your account from going into default. Once the payment is recorded as outstanding and you made the payment before 30 days, you’ll be charged a late fee without hurting your credit score. If you were a regular debtor and always paid your dues on time, call your creditors, and they might forgive the fee.
Payment Overdue After 60 Days
If you don’t pay your bills even after 60 days, it could have turned from bad to worse. Consumers can experience a sudden fall in their credit score, even up to 180 points. Usually, consumers with excellent credit scores experience an increased reduction in their scores. Sometimes creditors don’t report a payment until 60 days have passed, but you shouldn’t wait till then.
Payment Overdue After 90 Days
90 days mean you’re giving an impression of being negligent and ignorant towards making your payments on time. If you deliberately delay your payments on time, then your debt is sold to collection agencies, who are a bit famous for their aggressive tactics to collect payments. The collection agency will contact you repeatedly to receive compensation from you.
The risk is more severe in the case of collateral or pledge such as auto loans and mortgages, even if you can lose your vehicle or home in an auction.
How Long Do Late Payments Stay On Your Credit Report?
A late payment is a severe issue as it stays on your report for another 7 years. Even if you pay back all the dues after falling behind and decide to leave the bill unpaid, you must pay hefty charges, penalties, and the principal amount. Your lender may increase the interest rate or charge an APR (annual percentage rate). Sometimes, they can cancel your card, so you cannot make further payments.
Will Partial Payment Help From Being Reported Late?
Unfortunately, partial payments can only reduce the bill amount but can’t help you from marketing your payments as LATE!
What To Do If You’ve Made a Late Payment?
If you’re already falling behind, the sooner you pay the bill, the better. The effect of a late payment will get worse as time passes. However, you can try a few things after an amount is marked as late.
Request the removal of a late payment fee.
If you’ve always been good at paying your bills on time, you can avail yourself of the chance by emailing the bank manager. If you’ve missed it for the first time, ask them to exempt you from the late fee.
Revise your penalty interest rate.
If you’ve been regular for the last 6 months in your payments, and this time a late payment caused you an increased interest rate. You can avail of sending a letter to your issuer and rest it to the pre-penalty rate.
Pay all accounts on time.
Late payments cause credit scores to drop; however, avoid ruining your track record and keep making your future payments on time. Your credit score will improve automatically after several months of consistent on-time payments.
How to Avoid Late Payments?
Setting up an Autopay can Help.
Most lenders allow their debtors to set up an autopay for monthly payments or minimum balances. Also, your bank supports you in setting payment alerts to make timely payments. Even if nobody offers an auto-pay facility, you can set up a reminder on your phone to make your payments on time.
Consider a Debt Consolidation Loan
If you’re finding it difficult to catch up on different payments, then you can avail yourself of the facility of debt consolidation. You can consolidate all your debts into a single debt against one payment date. Your payment might be huge, but you can pay it in one go. This step will help you to reduce your chances of missing a payment.
Payment Protection Insurance (PPI)
You can always go for Payment Protection Insurance (PPI) to help you make repayments if you suffer a severe injury or fall into an emergency by losing a job. However, be careful and check all the intricate details to confirm that you meet the eligibility criteria.
We broke down all the necessary factors affecting your credit score and defined how to improvise it with time. All you have to do is monitor your payment history and pay your debts on time, even after you miss a payment.