How does a late payment affect my credit score?
Once a payment is seen as overdue, the provider you owe money to could flag your credit report with a ‘late payment marker’. This can have a negative impact on your credit score, which lenders use when deciding whether to offer you credit (for example loans, credit cards or a mortgage).
Single late payments, such as a missed credit card payment, are often viewed as minor slip ups.
They won’t necessarily ruin your chances of getting accepted for credit in the future, but...
They do send out a red flag to lenders that you’re not 100% reliable.
The good news is that if the missed payment is just a one-off and everything else on your report is positive, you can recover. Keep up with your bill payments going forward and your credit score can bounce back.
Quick tip
Set up a direct debit to make sure your credit card bill is paid on time every month.
You can use online banking to quickly and easily check there’s enough available in your account before the payment is taken.
When is a payment marked as late on a credit report?
A payment generally won’t be reported to the credit reference agencies until it’s at least 30 days late. So, a bill that slipped your mind won’t necessarily hurt your credit score – if you pay it before you’re reported.
That said, you may still be hit with a late payment fee, even if you’ve only missed a credit card payment by one day. This is usually around £12.
How do I know there’s a late payment on my credit report?
Late payment markers may be added to your credit file if your bills aren’t paid on time. These come with a number to show how many payments you’ve missed. So, ‘1’ for one payment late or missed, ‘2’ for two consecutive missed payments, and so on.
If you spot a late payment fee on your credit card bill, it’s worth checking all your credit reports (see below) to see whether it’s been reported.
Quick tip
You can access your credit reports for free with the three major credit reference agencies – Equifax, Experian and TransUnion.
How much can a late payment affect my credit score?
The consequences of late payments depend on your overall credit history.
If you’ve missed a payment deadline, lenders will often send a nudge to remind you to pay
Some lenders will offer you a grace period to make the payment before they report it to credit reference agencies
If the amount continues to go unpaid, the impact will be far more severe. After 30 days, you could see your credit score drop. You’ll likely take further hits after 60 days, and then 90 days. The longer it goes on, the worse it gets.
How much can a missed payment affect my credit score?
If you keep missing payments month after month:
Your credit score will drop, and
Lenders will likely see you as a risky borrower when running credit checks on you in future.
Even if you do get accepted, you might be charged much higher interest rates than someone with a good credit score.
If a missed payment hurts your credit score, the best thing you can do is to make sure you pay all future bills on time. Your score won’t bounce back magically overnight but you can get things back on track with consistent, on-time payments.
How long do missed payments stay on my credit report?
Missed or late payments will stay on your credit report for six years. While this isn’t good for your credit rating, the impact of a missed/late payment will lessen over time. That’s because lenders usually pay closer attention to your most recent credit history.
If you keep up with future payments, you should see your score improve over time. This can then make it easier for you to get approved for credit with better interest rates.
If a credit card bill slips your mind, pay it as soon as you remember. It’s much better to make a late payment than miss one altogether.
Charges and fees for late payments
Late payments don’t just mess with your credit score – they can be costly, too. Whether you’re a few days or a whole month behind (known as delinquency), you’ll usually be charged a penalty fee and interest:
Late payment fee
With a late credit card payment, being just one day late can trigger a late payment fee of around £12. This fee will appear on your next credit card statement. If you keep missing payments, you’re likely rack up more late fees.
Increased interest
Your interest rate may also go up and you could lose any rewards on your card. If, say, you have a promotional interest-free period on a balance transfer credit card, you might be switched on to the standard interest rate.
Clearly, this could prove very expensive, so it’s in your best interests to pay on time. Credit card debt can quickly spiral out of control if you don’t keep on top of it.
How to avoid late payments
Want to avoid late payments, keep your credit score in good shape, and qualify for better borrowing rates? Staying on top of your payments is key.
Follow these tips on how to make on-time payments and avoid a late or missed payment on your credit report:
Check when all your bills are due and how long payments take to reach your providers. Some payment methods take longer than a day to process, for example, if you’re paying by cheque.
Direct debits can take the hassle out of remembering, but make sure there’s enough money in your current account to cover them. If you’d rather stay hands-on, set up text or email reminders instead.
Try paying all or most of your household bills right after payday to make budgeting for the month easier.
Aim to set aside a rainy day fund for financial emergencies and unforeseen costs. That way, you can still cover your bills if you need to make unexpected payments.
Only apply for credit if you’re confident you can comfortably afford the repayments.
Looking for ways to manage debt?
If you’re looking for ways to take back control over existing credit card debt, you might want to think about a 0% balance transfer card. These let you transfer an existing credit balance to a new card which doesn’t charge any interest for a set period.
You can use our eligibility checker to find out whether you’re likely to be offered a balance transfer card without affecting your credit score.
FAQs
What should I do if I miss a payment?
If you miss a payment deadline:
Contact your lender or the company you owe money to as soon as possible
Explain the situation as they might be understanding and give you extra time to make the payment. This can minimise the damage and help avoid a late payment being added to your credit report.
If you missed a payment because you didn’t have the funds, it’s important not to bury your head in the sand.
You may be able to agree a repayment plan with your lender or card issuer that works for both of you
You can also get free debt advice from Citizens Advice or StepChange.
Can I remove a late payment from my credit report?
You can only get a late payment removed from your credit report if it was filed in error.
If you think there’s a mistake on your file, you can dispute a late payment on your credit report. You’ll either need to:
File a dispute with the relevant credit agency, or
Ask the lender that reported it to correct the inaccuracy.
Either way, they should investigate your complaint and amend your credit report if they find there’s an error. Having an inaccurate late payment removed can give your credit score a welcome boost.
Learn more about credit score corrections.
What are some acceptable reasons for late payments on your credit report?
Life happens, and sometimes there’s a good reason why you were late with a payment, such as illness, redundancy, or another unexpected situation. If that’s the case, you can add a ‘notice of correction’ to your report to explain the circumstances.
Lenders may or may not take this into account when deciding whether to approve a future credit application, but it’s worth a try.
Does making a partial payment keep a late payment from being reported?
It might seem like paying less than the minimum amount is better than paying nothing, but unfortunately that’s not how it works. Lenders will likely treat partial payments the same as missed or late payments. So if you don’t pay at least the minimum sum, this will usually be reported and have a negative impact on your credit score.
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