We’ve all been there—life gets busy, and it’s easy to forget about a payment here and there. Maybe you missed a credit card bill, a car payment, or even a student loan installment. But what actually happens when you miss a payment? How does it affect your credit score, and what can you do to fix it?
Let’s break it down in simple terms so you can understand how missing a payment impacts your financial health and what steps you can take to recover.
What Counts as a Missed Payment?
A missed payment happens when you don’t make at least the minimum payment on a loan or credit account by the due date. Depending on the type of account—credit card, mortgage, car loan, etc.—the consequences and timelines for reporting missed payments can vary.
Here’s the key thing to know:
- If you’re just a few days late, most lenders won’t report it to the credit bureaus yet. However, they may charge you a late fee.
- Once a payment is 30 days late, it’s likely to be reported to the credit bureaus. This is when it starts to impact your credit score.
How Does a Missed Payment Affect Your Credit Score?
Your credit score is a three-digit number that lenders use to figure out how risky it is to lend you money. One of the most important factors in determining your credit score is your payment history—it makes up 35% of your FICO score.
When you miss a payment, it sends a red flag to lenders that you might not manage your debts well. This can have both immediate and long-term effects on your credit score:
The First Strike: 30 Days Late
- Once your payment is 30 days overdue, the creditor will report it to the credit bureaus (Experian, Equifax, and TransUnion).
- Your credit score could drop significantly—by as much as 90 to 110 points for someone with a good or excellent score.
- The higher your score, the more it can drop.
60 Days Late
- If you still haven’t paid after 60 days, the damage grows. Your account will be marked as 60 days late, which can cause your score to drop even further.
90 Days Late or More
- At this point, lenders see you as a serious credit risk.
- Your account might be sent to collections, and the negative mark on your credit report becomes more severe.
The Long-Term Impact
- Missed payments stay on your credit report for seven years, even if you eventually pay off the debt.
- The good news? The impact on your score lessens over time, especially if you make all your payments on time going forward.
What Else Happens When You Miss a Payment?
Missing a payment doesn’t just hurt your credit score—it can lead to other problems, too.
Late Fees and Penalties
- Most lenders charge a late fee as soon as you miss a payment. These fees can range from $25 to $50 or more, depending on the creditor.
Higher Interest Rates
- Missing a payment can trigger something called a penalty APR on your credit card. This means your interest rate could jump to 29.99% or higher, making it more expensive to carry a balance.
Losing Promotional Rates
- If you have a special 0% APR offer, missing a payment could cancel it. You’ll then have to start paying interest on the remaining balance.
Collections and Legal Action
- If you miss payments for several months, your account could be sent to collections. In extreme cases, the creditor may sue you to recover the debt.
What Should You Do If You Miss a Payment?
Missing a payment isn’t the end of the world, but the sooner you act, the better. Here’s a step-by-step guide to limit the damage:
Make the Payment ASAP
If your payment is less than 30 days late, it’s usually not reported to the credit bureaus. Pay it immediately to avoid further consequences.
Contact Your Lender
If you’re struggling to make payments, call your lender. Many are willing to work with you by offering payment plans, temporary hardship programs, or even waiving late fees.
Set Up Auto-Pay
Prevent future missed payments by setting up automatic payments for at least the minimum amount due.
Monitor Your Credit Report
Check your credit report to ensure the missed payment was reported correctly. If you catch an error, you can dispute it with the credit bureaus.
Focus on Payment History Moving Forward
After a missed payment, the best way to rebuild your credit is to make every payment on time. Over time, positive payment history will outweigh the negative mark.
How to Minimize the Damage
If you’ve already missed a payment and it’s been reported, there are still ways to minimize the impact:
1. Bring the account current
Pay off the overdue balance as soon as possible. Even if the missed payment stays on your credit report, lenders will see that you’ve taken steps to correct the issue.
2. Keep Other Accounts in Good Standing
A missed payment on one account doesn’t mean you should ignore the others. Keep making payments on time for all your other accounts to show lenders you’re still a responsible borrower.
3. Add a Consumer Statement
If you missed a payment due to an extraordinary circumstance (like a medical emergency), you can add a statement to your credit report explaining what happened. While this won’t erase the negative mark, future lenders may take it into account.
How to Avoid Missing Payments in the Future
The best way to protect your credit score is to prevent missed payments altogether. Here are some strategies:
1. Create a Budget
Track your income and expenses to ensure you always have enough money for bills. Try our FREE Zero Based or 50/30/20 Budget Templates to get started today.
2. Set Reminders
Use your phone or calendar app to set reminders a few days before your payment due dates. I did this and my statement close and payment due dates literally became muscle memory.
3. Keep a Cushion
Build an emergency fund to cover at least one month of expenses. This way, you’ll have a safety net if unexpected costs arise.
How Long Does It Take to Recover from a Missed Payment?
Recovering from a missed payment takes time, but it’s definitely possible. The impact will lessen as you build positive credit habits:
- Within 6 Months: If you make all your payments on time and keep your credit utilization low, you may see your score start to rebound.
- Within 1–2 Years: A missed payment will hold less weight in your credit history as more on-time payments are added.
- After 7 Years: The missed payment will drop off your credit report entirely.
The key is consistency. Lenders look for patterns, so one missed payment won’t define your creditworthiness as long as you consistently demonstrate responsible behavior moving forward.
TL;DR
Missing a payment can seriously hurt your credit score, especially if it’s more than 30 days late. Your score could drop by 90+ points, and the missed payment will stay on your credit report for seven years. However, acting quickly, paying off the balance, and staying current on future payments can help you recover.
The bottom line? Missing a payment isn’t the end of the world, but it’s a financial mistake you want to avoid whenever possible. A little planning, like setting up reminders or auto-pay, can go a long way in keeping your credit score—and your peace of mind—intact.
