When Do Credit Card Companies Report Late Payments?
The appearance of a late payment on your credit report has the potential to negatively affect your credit score. Missing the deadline to make a credit card payment by a few days or even a few weeks may not be harmful, but more substantial delays will cause the credit card company to report the late payment to the credit bureaus and could have a lasting impact on your ability to get future credit.
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Facts
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Credit card companies generally report a late payment of any amount to the three major credit unions -- Equifax, Experian and TransUnion -- when 30 days have passed since the due date. The company subsequently will report payments that are late by 60 days, 90 days and 120 or more days. These late payments will remain on your credit report for seven years. Card companies may alert the credit bureaus if your payment is late by a few days or a few weeks, but it will not appear on your report. Some may wait until the payment is late by 60 days, rather than 30, but customers should not count on having that much of a cushion.
Effects
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The impact of late payments on your credit report depends on how late the payments are. A single late payment of 30 or 60 days will harm your credit score in the short term, but your score will rebound with time. Multiple late payments of 30 or 60 days is more harmful, while any late payment of 90 or more days may in fact have the same effect on your credit score as a bankruptcy filing would have. A late payment of 120 days or more may cause the company to turn your account over to a collection agency, further lowering your score.
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Purpose
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The point of your credit score is to help prospective creditors gauge your likelihood of being late with a payment by 90 days or more during an ensuing 24-month period. If you seek a bank loan or want to purchase an insurance policy, you will have difficulty if the creditor thinks you may be 90 or more days late with a payment. Hence late payments of 90 or more days are an especially damaging item on your credit report unless you can prove that your financial situation has changed drastically since.
Considerations
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Your payment history determines 35 percent of your scores with the three credit agencies, making it the most important factor, ahead of the amount of money you owe, the length of your credit history, your mix of credit and new credit applications. Blemishes to your payment history, if they appear on your credit report, may be enough to prevent you from getting the best rates and terms when applying for credit.
Solution
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The most obvious way for consumers to avoid the stain that late payments may leave on their credit reports is to pay their credit card bills on time. If nothing else, they should avoid missing the due dates by more than 30 days or, in the worst case, 90 days. If they are unable to avoid lengthy delays in making full payments, they should contact their card companies or a credit counseling agencies to negotiate debt payment plans as soon as possible. Such plans may help them avoid long-term damage to their credit scores.
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References
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