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

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.

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