Can a Single Late Payment Hurt My Credit Score?

You may be surprised at what missing a single bill could do to your credit.

Sometimes even the most financially responsible people are late paying a bill.

Maybe you forgot to write a check to your mortgage company. Or your credit card bill reminder email got trapped in your spam folder so you didn't realize it was due. Or maybe you encountered financial hardship and didn't have the money to pay your bill by its due date.

If you have a habit of paying your bills on time and in full, you might think that a single late payment wouldn't be a particularly big deal. Unfortunately, being late even once on a payment could have long-term repercussions.

How late payments affect your credit score

Of the factors that go into calculating your credit score, payment history carries the most weight. Your payment history shows whether you pay your bills when you're supposed to.

Lenders want reassurance that you're able to pay on time before loaning you money, and the higher your credit score, the more confidence they have in your ability to do so. Having excellent credit won't only increase your chances of getting approved for loans or credit cards; it'll also help you snag the best interest rates available.

Here's the problem with being late on a payment even once. That late payment gets factored into your credit score and brings it down. The extent of the damage depends on two factors: How late the payment is and how high or low your score is to begin with.

A payment that's 90 days late will hurt your score more than a payment that's 30 days late. That makes sense.

But this may surprise you: A single late payment will hurt a higher credit score more than a lower credit score. People with lower credit often get there because they're already in the habit of being late with payments. When your score is high and you miss a payment, it's more notable.

How much of a hit will your credit score take?

According to FICO, a single late payment of 30 days could result in a 90- to 110-point drop for someone with a credit score of 780 who has never missed a payment before. Ouch. To make matters worse, a late payment can stay on your credit report for seven years. If you slip up even once, that mistake could haunt you for a long time.

That said, you do get a little leeway when it comes to having your late payments reported. By law, late payments can't be reported to credit bureaus until they're a full 30 days late.

If you miss a bill due on March 15 but pay it by April 10, you're in the clear. Though you might face a late fee from the biller in question.

Furthermore, in some cases, a lender might grant you the benefit of the doubt. If, for example, you're a long-time credit card holder who's never missed a payment, your credit card company might let a single late payment slide rather than report it.

Avoiding late payments

People are usually late paying bills for one of two reasons: They forget or they don't have the money.

The first issue is easily remedied by automating your bills.

For example, you can arrange to have your mortgage payment deducted every month from your checking account. Or you can set your cable bill to pay at the same time every month. Even credit card companies allow automating your payments. You can usually choose to pay the full balance, the minimum payment, or a specific amount on a certain day each month.

Avoiding lateness due to financial issues is a little trickier. Your best bet is to maintain a healthy level of savings. That way, if you spend your entire paycheck in a given month and still have some bills left to tackle, you'll have the option to dip in and get those payments in on time.

Following a budget will also help you avoid being late due to absent funds. Once you get a better sense of how much you can afford to spend, you'll be less likely to go overboard.

We all make mistakes. Unfortunately, being late even once on a bill could have serious consequences. It pays to take steps to avoid late payments and keep your credit score intact.