Even barely late payments can impact your credit score

Dear Credit Score Report, If a payment is late, but by fewer than 30 days, how will that affect my credit score? I mean, if the payment is not done on the due date, but is two or three weeks late, does that affect the score anyway? Also will I be reported to the credit score companies for a payment that's less than 30 days late? Thank you. -- Adriana E.

Hey Adriana, Following any late credit card payment, the possible damage to your credit score depends on the lender -- and on you.

Although it may be fewer than 30 days late, the bank could still report your missed payment to the credit reporting agencies (CRAs). Whether it gets reported depends on the card issuer and your own borrowing behavior, experts say. According to FICO, creator of the most widely used credit scoring model, "not all lenders report late payments that are 30 days late," says Barry Paperno, consumer operations manager at myFICO.com. "Some hold off on reporting an account as delinquent until it reaches 60 days late. In this situation, a 30-day late will have no impact on the score, since the credit report will show no evidence of that late payment."

But your lender isn't the only factor. The other key consideration is whether you've generally been a responsible borrower. "Card companies likely take into consideration your past payment history when deciding whether to notify the CRAs [credit reporting agencies] about a late payment. If this is an anomaly, they may let it slide. If it's a common occurrence, they may be quicker to report you," says Lauren Bowne, staff attorney at San Francisco-based consumer rights group Consumers Union.

Think about how you've repaid the bank in the past. How often (and how recently) have you made other late payments? If you're not sure, scanning your credit reports for delinquencies should jog your memory. Making a late payment may be out of character for you, but it can still be damaging. Depending on your current FICO score, a single 30-day late payment can drop your FICO score by 60 to 110 points. (For more on this topic, see my story "FICO reveals how common credit mistakes affect scores.")

That drop can also follow a payment that's fewer than 30 days late, depending on when your bank reports your delinquency. "Be aware that when it comes to the reporting of late payments on credit reports, a payment that's late by one to 30 days is considered '30 days late,' late by 31 to 60 days is considered '60 days late,' etc.," says FICO's Paperno in an e-mail. "As a result, any payment made up to 30 days late will be treated as a '30-day late' by the FICO score."

Credit bureaus report late data differently, says Norm Magnuson, spokesman for the Consumer Data Industry Association, the trade group for the bureaus. The bureaus don't label a late payment as 30 days late unless it's 30-59 days late. "Therefore, Adriana E. would not be reported as 30 days late if she paid the bill 2-3 weeks following the due date," he says. 

Reporting just after the payment due date is unusual. "Most lenders report accounts as late when a payment is not received by the next due date. In other words, you aren't just late, but have totally missed the payment for that month," says Maxine Sweet, vice president of public education for credit bureau Experian.  

Therefore, your wallet is likely to feel the damage before your credit score does. "She'll still be hit with a late fee, for sure," says Ruth Susswein, deputy director of national priorities for Consumer Action, a nonprofit consumer advocacy group based in Washington, D.C. And as with the reporting of that late payment to the credit bureau, the bank may be more forgiving if you've been a good customer. To see if they'll revoke the late fee, give your card issuer a call and let them know you've been a long-standing customer who made a one-time error (assuming that's all true). 

Aside from contesting late fees, there's another good reason to pick up the phone. While it sounds like you'll be able to make a payment shortly, if personal problems (such as unemployment or health issues) are making it tough to come up with the money, be sure to let the bank know. Ideally, the card issuer will work with you to create a debt payment plan that's beneficial to both parties and prevents further damage to your credit score.

Even a single late payment is bad for your credit score, but rather than worrying about an isolated blunder, be sure to keep your finances in order from now on. "A one-time two or three week late payment will probably not drastically affect your credit score, but repeated late payments will definitely have a more significant effect, even if you are late by only a few days each time. A pattern of lateness is worse than a one-time mistake," says Consumer Union's Bowne. 

By taking a more holistic approach to your finances, your credit score will be better protected against one-time mistakes -- and more able to recover quickly if you do run into trouble. FICO recommends that after catching up on this card payment, you pay more attention to your borrowing as a whole: Avoid making late payments, keep debt levels low and maintain a lengthy credit history. "Generally speaking, the better the overall credit picture, the sooner the recovery," Paperno says.  

Good luck!

-- Jeremy 

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