If you’ve made a late payment, you may be wondering how it will impact your credit score. And unfortunately, even just one late payment can have a major effect on your credit score.
So how long will a late payment stay on my credit report?
In short, it takes 7 years before a late payment is completely gone from your credit report. This is true for certain late payments, foreclosures, certain completed bankruptcies, and certain collections and public records. As for late payments, your credit report will only reflect the late payment if that payment was made 30 days or more past the due date. So, if you are one day late, you may incur late fees, but this will not be reported to the credit bureaus.
For many consumers who end up paying 30 days or more after the due date, unfortunately, there is no way to remove the late payment from your credit score. However, your credit score may not still be as low as you think it is. Even though it takes 7 years for your late payment to completely go away, the older information has less of an impact on your credit score. FICO takes into account the recency and frequency of late payments, as well as the severity of your late payments (ex: 60 days late is more severe than 30 days late). So, your one late payment from 5 years ago will hurt much less than someone who just made 3 late payments in the past 6 months.
But how can I get the loans I need in the meantime?
My advice is to check your credit score again. You can access a free credit report from each of the 3 major credit bureaus each year. You may find that your credit score has gone up enough to get the mortgage loan you need. However, if your score is still not up to par, you may want to wait. Having a low credit score will affect your ability to qualify for low interest rates, resulting in you paying a lot more for that loan. Keep paying your bills on time, paying down revolving debt, and checking your credit score each year. If you continue to use credit wisely, your score should improve enough for you to get a good rate on your mortgage loan. Although your late payment may not be completely gone from your report, your score may improve before then.
Try not to make late payments. As many consumers know, late payments can have a lasting record that will make it much harder for you to get approved for loans. So, set up automatic transfers or payment reminders for yourself. If you don’t have the money to pay off all your debt, at least pay the minimum amount each month. This will keep your credit score from taking a hit.
And if you do have a late payment on your credit report, don’t just wait the 7 years. Keep working on ways to improve your credit in the meantime. A late payment does not mean that your financial future is ruined. It may be a bump in the road, but your credit score will improve over time.
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