It Happens To The Best Of Us

In this day and age, we all run extremely busy lives. No one is an angel, and therefore, even the best of us may forget to pay our credit cards bill one month. In this post I want to discuss how much a late payment will hurt your credit score. This information is based on my experience from reviewing 100’s of credit reports and scores for my clients through the great credit company Proscore. Please note, results may vary and these are all only approximate numbers.

Late Payments

 A late payment accounts for about 35% of the Fico scoring model. Being late on a payment can cause your credit score to take a deep dive. But let’s discuss how much your credit will fall, and for how long the effect of the late payment will last.

Before I start, let me make this clear. Not all late payments are equal. Here is what to consider:

  • How frequent do you have late payments?
  • How many days late was the payment?
  • How long ago did the late payment occur?

In this post, we will discuss a consumer that started out with a 760 plus credit score. If your score was higher or lower, then give or take on these numbers. We are also discussing a consumer that only has a single late payment. If you have more than one late payment, then the results will be far different.

Less than 30 days late

If you were less than 30 days late, then you can breathe a sigh of relief. This late payment will not have any effect on your credit score. Credit bureaus only allow late payments to be reported starting at 30 days. Anything less than 30 days late will not be reported to credit bureaus, therefore it will not have any effect on your credit score.

30-59 days late

A late payment of 30 -59 days may be reported to the credit bureaus. But please note: some banks, (for example Discover bank) will not report a first time late payment until it’s 60 days late. If the late payment is reported to the credit bureaus, the effect will be approximately as follows:

Account still in late status:

Your score can drop all the way to the high 500’s-low 600’s.

Account marked paid:

Once the account is marked paid, then Fico knows the worst is over! Your score will climb back up all the way to 700-720.

After 6 months:

After the late payment is past six months old, your score can reach 720-740.

Past 12 months:

A single 30-59 days late should not affect your credit score at all past 12 months.

60 to 89 days late

Late payments of 60 to 89 days late have a very similar affect to a 30-59 days late.

Account still in late status:

Your score can fall to the high 500’s- low 600’s.

Account marked paid:

Your score will bounce back to 680-700.

After 6 months:

You can reach a score of 700-720.

Past 12 months:

A single 60 – 89 days late should have a very minimal effect on your credit score past 12 months.

90 days late or more

Once the late payment hits 90 days or more, then your score is toast. The reason is that Fico scores are meant to predict how likely a consumer is to be late 90 days or more. Once you did it once, chances of you doing it again are high.

Account still in late status:

Your score will tank all the way down to the low – mid 500’s.

Account marked paid:

Once the account is marked as paid then your score will bounce back to the 640 range.

After 6 months:

You can reach a score of 660-680.

Past 12 months:

Your score will be between 680 -700.

Past 24 months:

Your score can climb all the way up to 720-730. From there it moves up slowly as time passes.

Charged Off Account

Once the account reaches 120 days late, in most cases the account will be charged off. Here is what you can expect.

Account still in late status:

Your score will go down to the low – mid 500’s.

Account marked paid:

For charge off accounts, paying up does not make much of a difference to your credit score.

After 6 months:

You can reach a score of about 620.

Past 12 months:

Your score will be about 640-660

Past 24 months:

Your score can climb all the way up to 690-710. From there it moves up slowly as time passes.

End Note

I want to repeat that this data is based on my own experience. The Fico scoring model is highly confidential and results may vary depending on many other factors not discussed in this post.

You can read more Fico score factors here.

If you have any questions about this post, then leave a comment and I will respond.

Hope this helps!