When is a payment really considered late?

Dear Praxis Credit Consulting,

I recently forgot to send a credit card payment until it was about 45 days late. I have never made a late payment before.Will this one time mistake really hurt my credit score?

-Lisa E

Dear Lisa,

It is impossible to say exactly if this one late payment will affect your score or not, frankly it’s up to your creditor and your own credit history. There is no quick and dirty answer I can give you to relieve your anxieties.What I can tell you is that creditors tend to be much more forgiving of these one-time mistakes to their customers with a spotless track record of payments made on time.For the future, here are the commonly asked questions when it comes to late payments.

When is a payment really considered late?

It is actually quite a common misconception that a 30-day late is the minimum time that a late payment will be reported to the credit bureaus.The truth is that the little bit of wiggle room creditors typically allow their customers for those “in the mail” payments is simply a courtesy offered to valued clients.A late payment is considered to be a “30-day late” as soon as one day after the payment is due. Really!

But what if the payment is just a few days late?

The recent souring of the economy has credit card, mortgage lenders, and just about every other creditor out there tightening their belts and with it, their leniency guidelines for clients making late payments.The creditors that once accepted the 15-day late payment without a peep just may begin calling you on late-day 5, and reporting a 30-day late as quickly as they see fit.

So what happens if the payment is more than 30-days late?

Unfortunately if a 30-day late payment hits a credit report, it typically will drop the score on an average of 60 to 110 points right away.Any payments which go anywhere between 31 days to 60 days late are considered a 60-day late and will compound the drop in score further.

Not only can a huge drop in credit score be expected, but there is no doubt that late fees will also be tacked on to your already late payments. The only way to really be sure if a late has been reported to the credit bureaus is to check the actual credit report.This is one of the many reasons that staying on top of credit activity is so important.

Is there anything that can be done to fix a late payment on a credit report?

It’s always a long shot but it never hurts to call customer service and ask for forgiveness on that late payment.It helps to butter up the representative by reminding them of your spotless record of on-time payments (if that’s the case) and be sure to explain the situation which caused you to have a late payment. If you state your case effectively you may squeak by with a 30-day late payment wiped from your credit, but don’t expect the same creditor to ever repeat this favor.

If you’re unable to have a missed payment forgiven and now bills are stacking up due to late fees or the loss of a job or whatever the situation, never be afraid to request to set up a payment plan to avoid further late payments in the future.Creditors are typically much happier to work with you than pestering you daily for a payment, and this is not notated anywhere on your credit report.

So Lisa, a late payment is not the end of the world or a great credit score.There is always hope to recover a favorable credit history.The best advice when facing a late payment reporting on your credit is to learn from the mistake and make the necessary changes to prevent it from ever happening again in the future, whether it means asking for forgiveness, negotiating a payment plan or setting up bill pay with online banking.The short-term damage may be done but a credit score is made up of your long-term credit history so keep your head up and keep those payments on time.

-Praxis Credit Consulting

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