11Jan2019

How long do late payments stay on your credit report?

Find out why late payments can severely hurt your credit score and how to avoid them.

CreditCards.com has reported that credit card delinquencies of 30 days or more, (different sources consider a credit card account to be delinquent after 30, 60 or 90 days being past due, depending on the source) as tracked by the Federal Reserve, have been increasing after falling for years. “The average balance on credit cards varies from Alaska’s high of $8,515 to Iowa’s low of $5,155, Experian’s State of Credit 2017 found.”

But how long do late payments stay on your credit report, and how much is this hurting your score? We’ve gathered a few facts on how delinquency is affecting you and how to avoid finding yourself in this situation.

How late payments affect your credit score and for how long

According to Credit Karma, a late payment on your credit report could stay on your credit report for seven years.

This same article explains that payment history information typically accounts for nearly 35% of your credit score, making one late payment potentially lower your credit score by several points. After a few late payments, your debt could be considered a loss for the lender. Click here to learn more about charge-offs and debt in collections.

How late payments affect your finances

Credit Karma explains that with late payments, not only your credit score will be affected, but your finances will hurt too as you’ll likely be charged a late fee for each late payment. Many times, this fee can be voided by the lender if you reach out to a representative and make a payment as soon as possible. When you make late payments, the lender starts seeing your debt as a potential loss, making them consider increasing your interest rate to a penalty APR. For credit cards, this penalty APR can be as high as 29.9%, which will only make it harder for you to pay off your card.

How to avoid late payments

Even though it’s easier said than done, avoiding late payments is key for you to keep a healthy credit score. A few easy-to-follow tips are:

  • Budget, budget, budget — Once you know exactly what you’re allowed to spend based on your monthly income and recurring payments, you’ll know not to go over it. If you stick to a budget and taking it seriously, you’ll never fall behind.
  • Click here for more on budgeting and savings.
  • Set up automatic payments so you don’t forget!
  • Refinance — refinancing a credit card is simply taking out a personal loan to pay it off and starting a new loan contract with a new entity. This can be beneficial as your interest rate could potentially go down (as well as your monthly payments) and your owed amount won’t continue to increase like it would with revolving credit.
  • Consolidate your debt — similar to refinancing, consolidating also uses a personal loan, yet here you are — as you can imagine — consolidating multiple sources of debt into one. This makes it much easier to keep up with just having to pay one minimum monthly payment to one lender, instead of having a seemingly endless list of payments each month.
  • Check your credit score regularly to find out where you stand and if late payments are being reported.

The bottom line on late payments

Late payments can seriously hurt your credit score as they will not only be reflected on your report but could also end up in collections and make it even harder for you to recover.

When taking out a loan or a new credit card, make sure to always budget and know exactly how much your monthly minimum payment will be. If you’ve already fallen behind, consider refinancing or consolidating debt with a low-interest personal loan.

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LendingPoint is a personal loan provider specializing in NearPrime consumers. Typically, NearPrime consumers are people with credit scores in the 600s. If this is you, we’d love to talk to you about how we might be able to help you meet your financial goals. We offer loans from $2,000 to $25,000, all with fixed payments and simple interest.

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