How Long Do Late Payments Stay on a Credit Report?

Feb 18, 2025Bankruptcy Law0 comments

When applying for car loans, mortgages, personal loans, and more, lenders use your credit score to determine not only interest rates, but if the lender will even grant you a loan in the first place. For this reason, a poor credit score can have a seriously detrimental effect on your quality of life. Late payments are one of the most common ways that people lower their credit score. These late payments will stay on your credit report for up to 7 years, even if you end up paying off the debt in full.

What Are Considered Late Payments?

Technically, a late payment is any payment made any time after the due date. However, many creditors give a grace period after the due date. If payment is received during this grace period, it will not be considered late. The exact length of a grace period will depend on the specific creditor, but it can be anywhere from 1-2 days to a week. If keeping your credit healthy is a priority to you, you should not rely on these grace periods. The only guaranteed way to prevent damage to your credit score is to not have any late payments at all. 

How Late Payments Are Recorded

Late payments are recorded on your credit report. The record will show how long the payment has been delinquent. This will usually be done in 30 day increments. It will first show on your credit report as “30-day late payment”. As the payment continues to go unpaid, this will usually be updated to 60-day, 90-day, and so on as the delinquency continues. Every time this is updated, the impact to your credit score will be more severe. 

Late Payments Timeline

Typically, creditors will not report a late payment to the credit bureaus until it has gone unpaid for 30 days. However, there are exceptions to this rule. For example, when it comes to federal student loans, late payments may not be reported until they reach the 90 day mark, giving you some extra time before your credit is affected. At the other end of the spectrum is mortgages. When it comes to mortgages, some creditors may report a late payment immediately. As mentioned, once a late payment is on your credit score, it will remain there for up to seven years. 

Impact of Late Payments on Your Credit Score

When it comes to determining your credit score, payment history is one of the most heavily weighted factors. This means that even a single late payment can have a severe impact on your credit score. For example, a 90 day late payment has the potential to lower your credit score by up to 100 points. When you consider that the average credit score in Pennsylvania is 723, this is a huge amount. The more late payments you have, and the longer they go unpaid, the larger the decrease in your credit score will be. Late payments have the potential to absolutely destroy a person’s credit score in a relatively short amount of time. 

Preventing Late Payments Before and After Bankruptcy

Preventing late payments can be done by taking a few relatively simple steps. These are:

  • Develop a Detailed Budget: Having a detailed budget will help you to ensure that you always have money available to make your expected payments. Of course, a budget only helps if you stick to it.
  • Set Up Automatic Payments: These can be a lifesaver when it comes to avoiding late payments. Automatic payment can be set up for most monthly, essential bills. This allows you to “set it and forget it”. The bill will automatically be paid on time every month.
  • Monitor Accounts: Automatic payments only work if there is money in the account the payment is pulled from. Many people have been shocked to find out they are months late on a payment because the money simply wasn’t in their account. Check your accounts at least once a month to ensure the required money is in there. 
  • Contact Creditors Proactively: If you know you’re going to miss a payment, contact your creditor. Being proactive can sometimes prevent a report being made to the credit bureaus. They may be willing to give you a grace period or work out an alternative payment plan.

If you take these steps, you’ll find it easy to avoid late payments.

Bankruptcy’s Impact on Your Credit Report

Bankruptcy will have a substantial impact on your credit report. Unfortunately, bankruptcy stays on your report for quite a long time. Usually, it will be on your report for ten years when it comes to chapter 7 bankruptcy and seven years when it comes to chapter 13 bankruptcy. Typically, a bankruptcy will drop your credit score by hundreds of points.  However, many times a bankruptcy case actually improves your credit score because discharged debt is marked as “$0.00 balance”.  Car loans and credit offers usually arrive right after a bankruptcy filing.  It usually takes three to four years to be offered mortgages. Fortunately, you can begin rebuilding your credit after bankruptcy quickly by making healthy financial choices.

0 Comments
Submit a Comment

Your email address will not be published. Required fields are marked *

Other helpful resources