According to Equifax, one of the three major credit bureaus, one 30-day delinquency could drop your FICO score as much as 90 to 110 points if you have good to excellent credit. On the flip side, if you have poor credit, one late payment isn’t going to affect your FICO credit score as much – roughly a drop of 25 points for a 30-day late payment. At the same time, multiple delinquencies greatly affect your FICO score, regardless of where your credit score stands.
How Long Does a Late Payment Affect Your Credit Score?
Just how long, or how much, a late payment affects your credit score depends on how late the payment is and how frequently this happens. Payment history is the most important factor in determining your credit score. While you do get late fees immediately following a missed payment, you have 30 days after the due date before a late payment gets posted to your credit reports.
If your payment ends up being 90 or more days late, you could run into some serious issues as this causes a snowball effect. Not only does your credit score drop, but one 90-day late payment affects your credit score in the long term – not just when it’s reported. At this point, the account, which also shows two 60-day delinquencies and two 30-day delinquencies, could be sent to collections, along with a “charged off” notation listed on your reports. If it’s an auto loan account, there’s a good chance your car is going to be repossessed if it hasn’t been already. Each of the delinquencies listed on your credit reports lowers your credit score even more.
While one 30-day delinquency is going to lower your credit score when it first appears on your reports, this shouldn’t cause severe long-term damage. With a 60-day delinquency, things get worse as your account ends up showing two 30-day late payments and a 60-day late payment – lowering your credit score even further. As you can imagine, multiple late payments cause more damage in the long run, especially if they occurred with an auto loan account and you’re applying for another car loan.
Can You Remove Late Payments from Your Credit Report?
A late payment stays on your credit reports for seven years. Unless the entry was a mistake, you can’t remove it and it remains there until it drops off after seven years. In some cases, a late payment entry is incorrect. Two of the most common mistakes you could run across are:
- The bill was paid on time, but was reported late.
- The delinquency occurred over seven years ago but hasn’t dropped off.
If either of these two instances apply, you can dispute the error to the credit bureau(s) that reported it. The credit bureau(s) must investigate your dispute within 30 days. Once 30 days have passed, you receive a letter explaining whether or not your dispute was resolved. If the credit bureau doesn’t respond within the 30 days, the negative mark is automatically removed.
The Bottom Line
Make all of your payments on time each month. One missed car payment could easily result in repossession, and losing your vehicle isn’t something fun to deal with. At the same time, if you recently lost your car due to repossession, or are simply looking to finance your next vehicle, let The Car Connection help get you started.
With our simple car loan request form and our nationwide network of dealerships, we can connect you to a local dealer that can help you get the financing you need. What are you waiting for? Get started today!