How Long Does a Missed Payment Stay on Your Credit Report?

If you missed a payment, it can be recorded on your credit report and be visible for as long as six years. How will that impact your credit score, and is there anything you can do to repair the damage or prevent it from happening in the first place? Let’s find out!

Does a Missed Payment Affect Your Credit Score?

Simply put, it depends on whether the late payment is recorded on your credit report. If it is, it’s almost certain to negatively affect your credit score.

When Are Late Payments Reported to Credit Reference Agencies?

Late or missed payments will typically show up within 30 days after they were due. However, many lenders and credit card providers have a grace period of approximately 15 days. Grace periods vary by lender, so check your contract to see if you have one. If your lender has a grace period and your previous payment was on time, they might not report your late payment to credit reference agencies until it’s 15 days past due. So if you submit your late payment promptly, you may be able to avoid having that negative mark added to your credit report.

How Much Does a Missed Payment Impact Your Credit Score?

You disrupt your payment history when you miss a payment. Your payment history is one of the biggest factors influencing your credit score. Missing a payment will bring your credit score down, but how big an impact it has depends on a few other factors:

• How Frequently You Miss Payments: If your credit report is spotless aside from the one missed payment, it will damage your credit score, but it won’t be the end of the world. But if you regularly miss payments, missing another will give lenders the notion that you can’t manage your payments and might be in over your head.
• How Long It Goes Without Being Paid: If you miss a payment and it goes unpaid for months, lenders might close your account, resulting in a default being added to your credit file. A default impacts your ability to open new credit lines as long as it’s on your account—seven years!
• How Old It Is: If you haven’t missed any more payments, your credit score will start to recover after a couple months. The older a missed payment gets (assuming you’ve paid it), the less impact it will have on your credit score.

In short, missing a payment hurts your credit score. If it’s not a regular occurrence and you take care of it promptly, your credit score will recover over time. But if it happens repeatedly or isn’t properly addressed, the damage can make you look risky to lenders and make it harder for you to qualify for new credit in the future.

Related read: What is a Default?

How Does a Missed Payment Impact You?

Even if you submit your payment within your lender’s grace period and are able to evade immediate damage to your credit score, late payments will still hurt you. Some of the ways you might be impacted include:

• Late Fees: If you miss a payment, you’ll almost always be charged a late fee. However, some credit card providers may waive this fee for your first missed payment. 
• Raised Interest Rates: After a missed payment, your credit card provider or lender could raise your interest rates. This could increase how much the loan costs over its lifetime, or mean any unpaid balance builds more debt more quickly.
• Revoked Promotional Deals or Rewards: Missing a payment can result in a credit card provider revoking special deals or rewards you had when you signed up. For example, if you signed up for a 0% interest balance transfer card but then missed your monthly payment, you could lose the 0% introductory rate.

Are There Acceptable Reasons For Late Payments on Credit Reports?

As a consumer, it’s your responsibility to manage your payments. With that said, it’s only human for things to come up and cause you to miss a payment. Maybe you were injured and couldn’t work, or were away from home with an ill family member.

If a late payment is added to your credit account, you can file a notice of correction explaining your circumstances. While this won’t remove the late payment from your credit file, it will add context that lenders will see when they assess your credit file. Keep in mind though that adding a notice of correction when you regularly miss payments is unlikely to help you much.

Related read: Will a Notice of Correction Fix my Credit Score?

What Should I Do If I Miss a Payment?

Have you missed a payment? Here’s what you should do:

1. Pay it ASAP: The longer you put off a late payment, the worse it will be for your credit score. If you pay it back promptly, it might never even be recorded on your credit report, saving you (and your credit score) a lot of trouble.
2. Contact Your Lender: By contacting your lender and explaining your situation, you may be able to have the late fee waived or prevent the late payment from being shared with credit reference agencies.
3. Take Steps to Prevent it From Happening Again: Prevention is the best way to protect yourself against late payments. Set up direct debits for any accounts that allow it and build an emergency fund that you can dip into in case you have a month where you’re over budget.
4. Sign up for the Pave App: Pave helps you track your bills across all accounts, making it easy to pay on time and prevent your credit score from being damaged again. Plus, we may be able to lend you money if you’re short on cash, and our credit line actively builds your credit.

Building credit in this economy is no easy task, but you don’t have to go it alone. Not only does the Pave app help you keep an eye on things, our app and Credit Experts can help you learn what actually impacts your credit score and—crucially—what actions you can take to improve it.

So if you’ve missed a payment recently, get back on top and download the Pave app from the App Store or Google Play!