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Late Payments Affecting Credit

Posted by Arnold on 10/08/14, 15:57

Paranoia usually sets in at the exact moment that you realize you didn't remember to schedule that online credit card payment. How many days late is my payment? How much will my late fee cost me? How will this affect my credit score? All of these questions (and more) may be swirling in your head, but there is no need to panic.

Depending on who your creditor is, there may be a way to prevent any damage to your credit score. The following guidelines may help you figure out how to recover from a brief period of forgetfulness when paying your credit cards:

• Check the Late Payment Policy: Different creditors have different policies when it comes to handling late payments. Some give you as little as 1 day before penalizing you, while others may give up to 30 days (or the next pay period). Find out what the policy is for your particular card, and make a payment as quickly as possible to avoid any fees or penalties.
• Call the Company: Sometimes all a creditor needs is a phone call from you to explain your situation. Supposing you forgot to pay your bill because of an illness, job problems, reduced hours or pay, or even just sheer forgetfulness, your credit company is almost always likely to forgive any late fees or penalties. Just be sincere and courteous, because your creditor has no obligation to help you out outside of your card's terms and conditions. Also, creditors are usually more flexible in helping you out if you are in good standing with them and have a history of on-time payments.
• Bite the Bullet: If there is no way to avoid a late fee or a ding in your credit score from missing a payment, just use the penalty as a reminder to yourself to be more mindful in the future. As long as you are not looking to open any new loans or credit cards in the next couple of months, a single negative item in your credit history should not impact your credit worthiness that much. It would probably take about 1 year to rebound from having a late payment, as long as no other negative items show up in your credit history in the meantime.

Whatever the reason you have for missing the due date on a credit payment, it's not the end of the world. Once again, credit companies are usually willing to work with you on a solution to avoid any negative marks on your credit history. And for those companies that only care about the bottom line, make a note to yourself to keep building positive items in your credit history (like being on top of your payments each month), and your credit score should rebound in no time.

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