How do late payments affect your credit score?

Making sure monthly repayments on credit cards, loans and even mobile phone contracts are made on time is crucial to maintaining a healthy credit score. If you normally pay all your bills on time and in full, the last thing you want is a late payment scuppering your good work…

Written by

The Editorial Team

Experts in personal finance, insurance and utilities

Last Updated

9 JANUARY 2023

5 min read

Does one late payment affect my credit score?

Once a payment is considered overdue, the provider you owe money to will ask for a late payment marker to be added to your credit report. This can have a negative impact on your credit score, which is what lenders use to work out how likely you are to make repayments.

Single late payments are often viewed as minor indiscretions, so won’t necessarily ruin your chances of getting accepted for credit in the future, like a credit card or mortgage. 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, you can recover. If everything else on your report is positive and you keep up with your bill payments going forward, your credit score can bounce back.

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, creditors will often send out a reminder to pay. Some will even grant you a grace period (typically 14 days) to make the payment before they notify the credit reference agencies (Experian, Equifax and TransUnion).

But if late payments start to occur regularly, or you actually default on your credit agreement, the impact will be far more severe. Missed payments can stay on your credit file for six years. Not only will your credit score suffer, but lenders are likely to consider you high risk when running credit checks on you in future. And even if a lender were to accept you, they’d probably charge you a much higher interest rate than someone with a good credit score.

If a late payment causes your credit score to drop, the best thing you can do is to make sure you pay all your bills on time. After a few months, you should see your credit score gradually improve. By building up a good credit history, the impact of late payments will lessen over time.

Charges and fees for late payments

You’ll usually be charged penalty fees and interest on late payments, whether you’re just two days late or 30 days past due, also known as delinquency.

You could be charged a late payment fee for a late credit card payment, even if you’ve only missed your credit card payment deadline by one day. The fee will appear on your next credit card statement. If you continue to miss the due date, you’re likely to be charged additional late fees.

Your interest rate may also go up and you could lose any rewards on your card. If, say, you have a promotional interest-free balance transfer credit card it might revert 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

Taking steps to avoid missing a payment will help to keep your credit score healthy and give you better borrowing rates. Follow these tips on how to make on-time payments:

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.
Make automatic payments by setting up direct debits, but make sure there’s enough money in your current account to cover them. Alternatively, you can get reminders to pay by text or email.
Arrange to pay all or most of your household bills the day after you get paid to make budgeting for the month easier.
Try to set aside a rainy day fund for financial emergencies and unforeseen costs, so 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.

Frequently asked questions

What should I do if I miss a payment?

If you miss a payment deadline, either by accident or because you’re struggling financially, you should 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 stop them from notifying the credit agencies of the late payment.

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’s satisfactory to you both. You can also get free debt advice from Citizen’s Advice or StepChange.

If you do get a late payment recorded on your credit report, you can try to lessen the blow by taking immediate steps to rebuild your credit score, like making sure you’re on the electoral register and checking your credit report for errors.

How long do late 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, its impact will lessen over time. That’s because lenders usually pay closer attention to your most recent credit history.

While your payment history will be considered, if you keep up with future payments, you should see your score improve over time, making it easier for you to get approved for credit with better interest rates.

Can I remove a late payment from my credit report?

If there’s a good reason why you were late with a payment, like illness or redundancy, you can explain the mitigating circumstances by adding a ‘notice of correction’ to your report. Lenders may or may not take this into account when deciding whether to approve a credit application.

If you think there’s a mistake on your file, you can dispute a late payment on your credit report by asking the lender that lodged it to rectify the inaccuracy. They should investigate your complaint and amend your credit report if they find they’re responsible for the error. Having an inaccurate late payment removed can give your credit score a welcome boost.

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