How long does bad payment history stay on credit report

Your credit report is a record of your payment behaviour. It tracks all your accounts and indicates where, over a period of two years, you have missed payments or gone into arrears on an account. Then after two years, this adverse information simply disappears. Right? Yes and no, your credit report contains all the positive, as well as negative information about your payment behaviour. In addition, it includes information which may, or may not be considered negative by a credit provider. Some of this information may remain on your credit report for a longer or shorter period. A court judgment, for example – where a court issues an instruction to you to pay an outstanding amount – will remain on your credit report for five years. If you pay the full amount owed before that time, the judgment will be removed from your credit report as soon as the credit bureau receives either proof of payment from the credit provider or a valid court order rescinding the judgment. It is therefore vitally important that consumers who have had judgments against them and have paid the outstanding judgment debt, check their credit reports to ensure that this negative information no longer remains on their credit record. It is important to remember however that judgment debt is usually higher than the original amount owing. This is because it includes the original debt plus any other costs that may have accrued, including interest and legal charges. Other potentially negative information which could be contained in your credit report includes:

• Enquiries. Every time a consumer applies for credit, the credit prover will make an enquiry about the consumer’s credit record. This information is recorded and will reflect on the consumer’s credit report for one year. A high number of these enquiries could indicate that you are “shopping around” for too much credit, which could indicate that you may be in financial difficulties.
• Complaints. If you lodge a complaint about your credit report and your complaint is rejected, this information will be reflected on your credit report for six months.
• Adverse classifications relating to an enforcement action taken by a credit provider. If you don’t pay your account and the credit provider takes action against you, such as sending you a letter of final demand, this information will remain on your credit report for one year. If you pay the full amount owed before that time, the information will be removed from your credit report as soon as the credit bureau receives proof of payment from the credit provider.
• Adverse classifications relating to consumer behaviour. These classifications are more subjective than those relating to enforcement actions. For example, if you continually pay your accounts late, a credit provider could have you classified as a “late” or “tardy” payer. This classification remains on your credit report for one year. If you pay the full amount owed before that time, the information will be removed from your credit report as soon as the credit bureau receives proof of payment from the credit provider.
• Debt restructuring. Information relating to applications for debt restructuring remains on your credit report until a clearance certificate is issued.
• Sequestration. A sequestration order remains on your credit report for five years, or until a rehabilitation order is granted. A rehabilitation order will continue to reflect on your credit report for a further five years.
• Administration order. If you have applied to be placed under administration, this will remain on your credit report for five years or until the administration order is rescinded by a court.

Other information that may appear on our credit report includes:

• Trace. A trace alert is placed on your credit report by a credit provider who has been unable to make contact with you and has asked to be notified when any updated contact information is loaded on to your credit report.
• Consumer remarks. You can ask that TransUnion include an explanation of facts or conditions that affect you on your credit report. For example, if your identity document has been stolen, you may want this information included in your credit report to try and prevent your identity being used fraudulently.

If you believe there is any information on your credit report that should not be there, or that should have been removed, you should immediately lodge a dispute with the credit bureau. The bureau is obliged to investigate and respond within 20 days.

Unfortunately, late credit card payments happen, for a variety of reasons. If you’ve ever made a late payment, you’ve likely seen your credit take a plunge. This is because your payment history counts for 35 percent of your FICO score.

The good news is you can recover from a late payment if you work on getting your finances and payments back on track. Keep reading for expert advice on how long it takes to recover from one and how to fix — or at least mitigate — the damage a late credit card payment can do to your financial well-being.

How does a late payment affect your credit report?

Lenders typically report late payments to the credit bureaus once you’re 30 days past the due date, meaning you’re not considered late if you’re only a few days past the deadline. In fact, if you happen to catch your missed payment within a few days of your due date, you should quickly pay it (either the minimum or in full). If so, your creditor won’t report any negative activity to the credit bureaus.

A late payment will usually stay on your credit report for seven years, from the date of delinquency. Late payments show on your credit report as 30, 60, 90, 120 and 150 days late. If you still haven’t paid the overdue amount after about 180 days or so, the issuer likely will charge it off and turn it over to a collection agency, which will damage your score even more.

Essentially, if you make a late payment today, it will remain on your credit reports for up to seven years. That negative mark will affect your credit report during that time, but the impact will gradually wane.

How much does a late payment damage your credit score?

Late payments can lower your credit score by 90 to 110 points. Plus, the later you pay, the worse the impact on your credit score — a 60-day delinquency will affect your score more than a 30-day delinquency.

While it might seem like not such a big deal to make one late payment, it is to lenders.

“The way you pay your bills gives potential lenders a snapshot of your sense of financial responsibility — and paying late doesn’t exactly signal a high degree of that,” according to Drew Cheneler, founder of the personal finance website SimpleMoneyLyfe.

Cheneler also noted that a late credit card payment impacts those who already have excellent credit more than those who are in the poor or fair category. Because subprime consumers typically have a history of late payments — or other risky credit behaviors — one more ding on their credit report will not affect their score as badly as it would the score of someone with no delinquencies on their report.

How long does it take to recover from a late payment?

Though a late payment stays on your credit report for seven years, you can take steps immediately to work on the fallout of it.

Once you miss a payment, even if it’s not officially reported as late payment to a credit bureau, your issuer may charge you a late fee of up to $41. If your payment is late by more than 60 days, the issuer may also raise your interest rate to the penalty APR, which is usually much higher than your standard APR.

How long it takes to recover from a late credit card payment can depend on both your current credit situation and the costs of any late fees, says accredited financial counselor Lauren Bringle Jackson of Self Financial, Inc.

“So if you already carry a balance, you’re struggling to pay each month, adding extra fees certainly won’t help your financial health,” Jackson says. However, she added, it’s not all doom and gloom if you miss a payment.

If you have a long, positive history with your card issuer and have never missed a payment before, you may be able to get the late fee waived. As for your penalty APR, you must make at least the minimum payment on time for six consecutive months to get back to your standard APR.

“Just start making all your payments on time each month immediately, but keep in mind that approach will take time, which could be anywhere from a few months to a few years depending on your credit profile,” Jackson advised.

How can I get late payments removed from my credit report?

Ask for a courtesy deletion

If you feel you have a good reason for paying late, such as thinking your bill was set up for automatic payment or that you switched banks and your payment was accidentally forgotten during the transition, you should try contacting your creditor for this.

“In a nutshell,” Charlie Scanlon, an attorney at Phoenix Credit Consultants, says, “if you have a good payment history, you bring that to the creditor’s attention and request that they ‘give you a break’ for your single oversight, which they just might do if you have a good payment history and ask nicely.”

Write a goodwill letter

You can also send a goodwill letter to your issuer. The letter should include the account number, address, a concise explanation of why the payment was missed, how you plan to handle credit responsibly in the future and specifics about the negative mark you need removed and from which credit bureaus’ reports.

There is no guarantee that a goodwill letter will work, but at least it won’t bring your score down if it’s rejected.

“Keep in mind that it can be a few weeks before your goodwill letter is accepted or rejected,” says Nathan Wade, director of marketing at WealthFit.

Dispute inaccurate or old late payments

If one of your credit reports shows an incorrect or old late payment, you can file a dispute with that bureau — either by mail, phone or online. The credit bureau should investigate and determine if the information is inaccurate or if it’s old enough to have fallen off your credit report. If so, it will be removed.

How to avoid late payments

If your paycheck typically comes in a few days after your due date, making it difficult for you to pay on time, changing your due date (a common feature for most issuers) could do the trick.

Credit card bills are typically due at 5 p.m. of the due date. However, if you’re on the West Coast, but your card issuer is based on the East Coast, your bill could be due earlier in the day than you think. Be sure to check with your issuer and iron out these details before your next due date. Some card issuers may set a later due date if you pay your bill online, rather than through the mail.

There are a few things you can do to avoid making late payments:

• Sign up for autopay.
• Set up reminders on your phone calendar or email.
• Make weekly payments instead of large monthly ones to stay on top of the balance.

If you know in advance you’re going to miss your card payment, contact your issuer as soon as possible. They could be lenient if it’s your first time being late on your bills. Above all, once you’ve cleared the late payment, you should resume timely, preferably full, payments as quickly as possible.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

Barri Segal is a staff reporter at CreditCards.com with 20-plus years of experience in the publishing and advertising industries, writing and editing for all styles, genres, media and audiences.

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