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What Happens to Your Credit Score When You Pay a Bill Late?

Two people looking worried while reviewing bills at their kitchen table.

Image source: Getty Images

Your credit score is an indicator of how risky a borrower you are. If you have a strong credit score, a credit card company may be more likely to approve an application for a new card. And a personal loan or auto loan lender may be more likely to approve your loan application and give you a more favorable rate.

On the other hand, a lower credit score tells lenders and credit card issuers that you don’t necessarily have the most solid track record of paying bills and managing your credit well. As such, you may be denied a loan or credit card if your credit score is poor.

Now, there are different factors that go into calculating a credit score. These include the amount of revolving credit you’re using at once, the length of your credit history, the types of credit accounts you have, and the number of new loans or credit cards you’ve recently applied for.

But the factor that carries more weight than any other when calculating credit scores is your payment history, which speaks to how timely you are with your bills. And that’s why paying a bill late could cause major damage to your credit score — even if it only happens once.

It pays to be timely with bills

If you’re a few days late paying a credit card bill or sending in a mortgage payment, it generally won’t do anything to your credit score (though you might face a late penalty or fee from the entity you owe money to). In fact, Experian says late payments don’t even get reported to the credit bureaus until you’re 30 days past due.

But from there, a single late payment has the potential to drag your credit score downward. And unfortunately, the damage might be more severe if you have strong credit to begin with.

You might think that if your credit score is high, a single late payment wouldn’t do much damage since it’s an out-of-the-ordinary event for you. But actually, the opposite is true. Experian says that if you have poor credit already and another late payment is thrown into the mix, it likely won’t have as severe an effect as a late payment would for someone with excellent credit. Go figure.

Meanwhile, the further behind you fall on payments, the more credit score damage you might face. Being 90 days late on a payment, for example, is apt to lower your credit score more than a payment that’s just 30 days late.

You should also know that over time, the impact of late payments on your credit score diminishes. And after seven years, late payments are removed from your credit report completely. Once that happens, they won’t impact your credit score at all.

But still, it’s important to avoid late payments as best as you can. Even one late payment could cause a lot of damage.

What to do if you’re late with a payment

If you’re a few days late paying a bill and you make your payment within 30 days of its due date, generally, nothing will happen from a credit score perspective. But let’s say you realize after 35 days that you didn’t make a payment. If so, contact the entity you owe money to, arrange to make the payment at once, and ask if it’s possible to not report your lateness to the credit bureaus.

If you’ve been an account holder for many years and it’s your first offense, you may be let off the hook — especially if you’re right past the 30-day mark. Otherwise, do your best to make your payment as soon as you can. You’re better off being just 45 days late with a payment than 65 days late.

At the same time, set calendar reminders for when your bills are due so you don’t risk being late due to forgetfulness. Even better, set up your bills to autopay when that option exists. Many payees will allow you to set up automatic recurring payments, and it’s a good option for bills that are fixed (such as if you have the same mortgage payment due every month).

Finally, aim to follow a budget and keep track of your spending. That way, you’ll be less at risk of being late with a payment due to a lack of funds.

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