How Long Will A Late Payment Remain On My Credit Report?

Understanding what stays on your credit report and for how long may feel confusing and overwhelming. Worry not! Credit experts from CreditMantri are here to help you out. In this article, we take a look at late payments: its impact on credit score, how long it stays on the credit report, and smart ways to minimise the negative effects of late payments on your credit history. 

Answering the question, “how long will a late payment remain on my credit report?” The short answer is seven years. Delayed payments are reported on your credit report for seven years from the original date of the missed payment. That may seem like a long time. But, worry not, there are a few ways to get it sorted and improve your credit report over time. Continue reading to find out how. 

What is termed as a late payment? 

Strictly speaking, any credit card bill or EMI payment that you miss paying on the due date is considered a late payment. However, different lenders have varying rules for the classification of late payments. 

For example, your credit card agency may offer you a grace period of 30-days from the due date before your bill will be termed as a late payment. On the other hand, your loan provider may provide an extensive timeframe, say 60 – 90 days, before classifying a missed EMI payment as a late payment. 

Generally, when you miss an EMI or credit card bill by the due date, it’s reported to credit bureaus and begins to appear on your credit report. If you haven’t checked your credit report recently, you can get it within a few minutes at CreditMantri. See if you have any late payments reported on it, and then take the necessary steps to recover from past late payments. 

How long does a late payment stay on my credit report? 

Late payments are technically known as delinquencies. These payments generally fall off the credit report after seven years from the original delinquency date. 

Let’s say, for example, you missed an EMI payment in December 2020. Your lender reported this late payment to the credit bureau in January 2021. Then you can expect this note to remain on your credit report until January 2028. 

Do late payments remain on the credit report even after I bring the account current? 

Sadly, yes! You may have missed paying a loan EMI payment in January and February 2021. But, you realised your mistake and paid the pending EMIs in March 2021. Still, the two delinquencies (late payments) stay on your credit report until the delinquency period is over. However, note that the delinquency’s negative impact decreases with time and once your accounts have been made current. 

How much of an impact does a late payment have on my credit score? 

Generally, speaking your payment history accounts for nearly 35% of your credit score. So, a late payment is bound to have a significant impact on the score. However, how much of an effect it creates on the score depends on several other factors affecting your financial situation. With that said, here are some thumb rules that can help you evaluate the impact of a late payment on your credit score:

  • The longer the delinquency, the more harm it does to your credit score. For example, an EMI payment delayed by 90 days can hurt your credit score more than an EMI payment late by 30 days. 
  • The more the number of late payments, the bigger the negative impact on your credit score. For example, a one-time late payment has a lesser negative impact than frequent late payments. 
  • The late payment creates more impact as soon as it’s reported. The effect of a late payment decreases as it ages. However, keep in mind that the time taken for your credit score to recover after a late payment will depend on several other factors as well. 

*Note that different credit bureaus have their algorithms to evaluate your financial information and calculate your credit score. So, a late payment could have more of an impact on the score than another. This is one of the reasons for slight variations in scores from different bureaus. 

Is there any way to minimize the impact of a late payment on my credit score? 

First things first, if you have missed paying EMIs or credit card bills, try to pay them off soon and bring your credit account to date. As mentioned above, the impact of a late payment on your credit score increases when the delinquency gets longer. 

If you’re looking to delete a late payment from your credit report, you can try the options listed below:

  • Report errors to the credit bureau. Suppose you have paid all your bills on time, and the lender has erroneously reported it as a late payment. In that case, you could raise the issue with the lender/credit bureau to get it deleted. Make sure that you submit proof of on-track payments while raising a dispute. 
  • You can request the lender for a goodwill deletion. Write a letter to the lender explaining the reason for the delayed payment, your finances, and state that you have got your finances back on track. Depending on your previous relationship with the lender, it may be possible to get them to delete the late payment of your credit report. This method is likely to work if you have a good payment record and usually pay your bills/EMIs on time. 
  • Negotiate with the lender. Your lender may agree to remove the late payment from your credit report if you decide to settle the outstanding balance in partial or full. 

Tips to Avoid Late Payments and Keep your Credit Report Healthy & Credit Score Intact

  • The easiest way to avoid late payment is to set up automatic payments (ECS) on your bank account. This way, you don’t run the risk of forgetting EMIs/credit card bills go past the due date. 
  • If your bank doesn’t offer this facility or you pay from different accounts every month, you can set up reminders on your smartphone alerting you to pay the bill on time every month. 

Remember, it’s easier to avoid late payments than trying to get it off your credit report once it’s reported. 

Bottom Line

Late payments hurt your credit score and can stay on your credit report for a long time. The best way to avoid missing payments is to set up automatic bill/EMI payments from your bank account.