How Much Does One Late Payment Affect Your Credit Score?

 in Blog / Credit
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It happens to all of us. You are busy at work, home, or with the kids. The month flies by and you forget to pay your credit card bill. You feel a rush of anxiety, and run over to your computer to pay off your bill. The question lies in the back of your head.  Will your credit take a hit?

How much does one late payment affect your credit score?

One late payment will have an impact on your credit score. Typically, it can drop 60-100 points. This is because your credit history makes up 35% of your credit score. But, there is good news. Credit card companies usually won’t report a one late payment until it is 30 days past due. So it is extremely important to pay your late payment as soon as possible. So if you can pay off that one payment before that 30 day mark, you may just have to pay a late fee to the credit card company. 

How long does a 30-day late payment affect your credit score? 

Late payments should be a matter of great concern for anybody who wants to maintain a clean credit score. Making late payments can, without a doubt, have a negative impact on your credit score and can even affect your overall ability to take out a loan or mortgage in the future. 

While there are penalties that have been set up by lenders for those who make late payments, if you were unfortunate enough to make a 30-day late payment, then you will have that late payment record sitting on your credit report for up to 7 years. The negative impact of that on your credit score can be tremendous long term. This is why it is so important to avoid debt. 

A late payment, which is also known as a ‘delinquency,’ will normally fall off a credit report after seven years from the date of the delinquency. If you do not bring an account now, then the creditor is going to close it and charge off the debt before sending it to collections.

How long does it take to improve credit score after late payment? 

If you have a late payment, it is still possible to improve their credit score in a matter of weeks. In most cases, some of the ways by which you can improve your credit score are: 

  • Disputing any errors that are present on your credit report
  • Paying down your credit card debt
  • Paying off collections accounts to improve your credit score

When it comes to improving your credit score after late payment, the answer varies depending on your situation. 

For instance, some people look to improve their credit score after making minor mistakes, maxing out the spending limit, or missing payments. 

Others find themselves having to deal with other serious issues, such as bankruptcy. If you’ve missed a credit card payment, then the average recovery time that you could be looking at is 18 months. You can also expect significant damage to your credit score. 

This is why you should always be working toward improving your credit score, especially since your credit score is constantly changing based on the latest information in your credit report. While you cannot expect to get the highest credit score, it is possible to maintain a good credit score after a late payment. 

Does a 1-day or 2-day Late Credit Card Payment Affect My Credit Score?

A 1 or 2-day late payment is not going to have a significant impact on your credit score. A late payment is not going to be reported to the credit bureau until after a full 30 days have passed. When that happens, it could also trigger a loan default, which is why a 30-day late payment should be avoided at all costs. 

Mortgage Late Payment 

Mortgages and other loans usually have a grace period of a few days or a week, so be careful and read the fine print. 

Credit Cards

When it comes to credit cards, a late payment can trigger a penalty if you are late by just one day. The penalty that you will get for being late the first time is not going to be substantial and usually you have to pay a late payment fee. However, if you miss subsequent payments over the next billing cycles, then you should expect to pay more, and it goes without saying that this will also negatively affect your credit score in the long run. 

Can a Lender Remove a Late Payment? 

It is possible for a lender to remove a late payment, but that can only happen if you request it. 

To get your late payment removed, all you have to do is ask the lender to remove the late payment with a Goodwill Adjustment Letter. This is considered to be the easiest way of getting a late payment removed from your credit report. 

To get the process started, all you have to do is write a letter to the creditor and explain your situation and the reason for the late payment. Once you’ve started your reason, you can then ask them to forgive your late payment. It will then be up to the creditor to choose whether they want to remove your late payment or not. 

While this may seem like a long shot, this method usually works, especially if you assure the creditor that you will not make a late payment in the future. 

Will one late payment affect me getting a mortgage? 

A late payment is going to have a negative impact on your credit score, but the severity of the score drop is ultimately going to depend on the type of credit score you have and your credit profile. 

When it comes to getting a mortgage, making one late payment (that does not stay late for longer than 30-days) is not going to have a negative impact on your credit profile. Neither will it weaken your ability to get a mortgage. That being said, whether or not you can get a mortgage after late payments will all depend on multiple factors, such as how delinquent you are when applying for the mortgage, as well as your overall credit history. 

Those who have a strong credit history will fare better at getting a mortgage despite making a few late payments. That said, it is likely you are not going to qualify for the best rates or terms even if you do get a mortgage. 

Your payment history is going to be the main determining factor when it comes to getting a mortgage. If you made multiple late payments in the past year, then you can expect lenders to offer you a mortgage with a higher interest rate and a higher down payment.

 This is why it is so important to make sure that your payments are on time – as if you have a string of late payments under your belt, it’s going to have a massively negative impact on your overall credit score. 

Conclusion 

Going forward, the best thing to do is make sure you pay your bills on time. One of the easiest ways to do this is set up automatic payments to your credit cards each month. This will allow you to pay off your credit cards without having to think. If you are struggling to stay current, try setting up a budget each month so you can track where your money is going. 

andrew
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