Here’s What Happens to Your Credit Every Time You Make a Late Payment

overdue payment notice

Credit cards can help you build credit, earn rewards and provide flexibility in your financial life, but only if you manage them responsibly. Rule No. 1 of responsible credit card use is to never miss a payment. According to the Consumer Financial Protection Bureau (CFPB), credit card issuers have been pulling in $12 billion to $14 billion a year in penalties — but if you miss a payment, a late fee is just the start of your problems. 

At First, the Impact Is Manageable

Your card issuer must wait 30 days past your due date before reporting a missed payment to the credit bureaus, so you’ll avoid the heaviest damage if you pay within a month — but that doesn’t mean there aren’t any consequences. 

First, most cards hit you with a late fee, although some, like Citi Simplicity, Apple Card and Petal 2, don’t charge any late fees. Others, like Discover It, let you slide the first time but then assess a penalty for subsequent missed payments.

According to the CFPB, most issuers charge around $26 the first time and then around $34 for repeat offenders — but it can go even higher

If it’s your first slip-up, you can usually get your issuer to reverse the fee just by calling and asking — but the long-term consequences are graver. 

According to Experian, missing a payment by even one day can cancel promotional rates like 0% APR and result in a penalty APR assessed to future purchases. If you’re late by 60 days, the bank can apply the penalty APR retroactively to past transactions.

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After 30 Days, the Real Trouble Starts

If a month passes without you paying at least the minimum balance, your negligence will show up on your credit report for all to see. It’s virtually impossible not to know you’re late — your card issuer will call and email you with increasing urgency throughout the month. 

If you can’t pay, they’ll probably work with you, but ignoring them will always produce bad results. When the bank reports you as delinquent to the credit bureaus, there’s no undoing it. Unless you have a legitimate dispute that the bank made an error, you can’t call and ask for slack like you can with your card issuer during those first 30 days. 

Payment history accounts for 35% of your FICO credit score, and a single missed payment can be devastating.

The Better Your Score, the Worse the Damage

FICO gives the following example of how one missed payment can impact two people with two different credit profiles.

  • A borrower with a long credit history, low utilization, many accounts and no delinquencies or charge-offs could expect a very good score of 793 to drop to between 710 and 730. That range is still considered good, but the borrower will no longer be eligible for the best cards, the best rates and the best terms.
  • A borrower with a short history, high utilization, few accounts and some past blemishes could expect a fair score of 607 to drop to between 570 and 590, both of which are dangerously low scores. 
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Those are just examples. Depending on your score and your credit history, one missed payment could cause a drop of up to 100 points. The blemish can remain on your card for up to seven years, although the impact fades with time and you can work to bring your score back up.

Being 30 days late is bad, but 60 or 90 days are much worse. If you miss a payment, bring your account to current as quickly as possible to stem the damage, which will only worsen with time.

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