How late payments impact your credit score and access to credit?

When you’re late on a payment, this can have a major effect on your credit score. In fact, late payments make up for 35% of your credit score. Even if you miss one bill payment, you can lose as much 150 points. While it’s not always so dramatic of a drop, it’s still essential that you pay things off before the deadlines. You may not qualify for prime credit cards, low-interest loans, and decent mortgage rates.

This is because when your credit score is less because you’ve missed a payment or are late, this becomes a red flag to lenders. To keep your credit score healthy, make sure to pay your bills on time.

How Badly Will a Late Payment Affect Your Credit Score?

There are many factors that go into changes in your credit score. This includes how many hard credit checks have been made on your report and your credit utilization. Paying bills will help keep your credit score healthy. If you don’t, it can quickly decline. Here’s a breakdown:

  • Credit score of 713 or more – 30 day overdue payment can cause a 90-110 point drop.
  • Wait another 30 days and it will drop even further.
  • This puts you into a good credit score to a poor credit score.

Late Payments of 30 Days or More

If your payment is over 30 days late, your creditor may report this to the credit bureau. This information is then added to your credit report and immediately impacts it negatively. What’s more is it can land for up to six years. Payments that are over 120 days late may be further penalized as the lender can label your account as a charge-off. This is considered a derogatory entry on your credit report and it can severely affect your credit score.

Multiple Late Payments

If you make multiple late payments consistently, you might be charged-off or your account will be sent to collections.


This is when the lender writes off your account as a loss. Your account is closed and no longer valid so you can no longer use it. Your lender will likely put every effort into getting the money from you before they close the account. Your debt is then transferred to a collection agency or third-party collection agency. You still have to pay the overdue balance and you will be pursued by the collection agency, which is usually quite aggressive. This stays on your credit report for up to 6 years from the date you missed your payment. If you pay it off, it’s still going to remain on your credit report but it won’t have such a negative impact.

What Other Negative Effects Come From Late Payments

Besides a reduction in your credit score, you may have to pay late penalty fees and cope with interest rate hikes because you’re not entitled to the best credit products. You may be considered a liability so this negatively impacts your ability to rent or lease property. Things like your phone bill may come with late fees so if you’re already having a hard time managing bills, this further complicates your financial issues.

If you’re constantly overdue on credit card payments, the credit card company may bump up your interest rate. If you received a promotional rate when you got the credit card, it could be stripped away from you.

When your financial reputation is in jeopardy, lenders may not be as willing to give you money. A lender wants to work with those who have a good history of making their payments on time. If you’re making late payments beyond the 30-day allowance, this will be reflected on your credit report for lenders to see.

When Will Late Payments Show Up on Credit Reports?

Any payment to a lender or creditor will be recorded on your credit report. Lenders use standard codes when it comes to reporting payments to the credit bureaus. Every payment is going to be reported with a rating of 1 and 9, indicating when you make a payment.

Payments and ratings show up on your credit report as follows:

  1. When you pay in full within 30 days of billing
  2. 31-59 days late payment
  3. 60-89 days late payment
  4. 90-119 days late payment
  5. 120 days late, but not yet rated“9”
  6. Code isn’t used
  7. Regular payments under a consolidation order
  8. Repossession of property
  9. Charged-off account written sent to a collection agency, or bankruptcy

So, what is a good credit score in Canada? Let’s dive into numbers. Here’s a Complete Guide to Credit Scores in Canada!

Removing Late Fees and Penalties From Creditors

Get in touch with you creditor to request a removal of late fees and interest rate hikes that happened from a late payment. If you’re usually in good standing with the financial institution, you can ask them to forgive a late fee on a missed loan payment. If a late payment caused a rise in the rate of your credit cards, your provider has the power to change it back if you’re able to keep up with payments for six months consecutively.

Make Payments on Time to Keep Your Credit Score in Good Standing

A late payment is going to affect your credit score for a long time. Even just a late payment can take up to 18 months to recover from. Do your best to create a habit to pay bills on time as this will avoid your credit score from being affected negatively or having to pay extra fees.

There are tools that can help including automatic payments and tracking tools to manage any bills throughout the month. If you’re having a hard time keeping up with your bills, there are some options you might be able to work out with a lender.

Frequently asked questions about how late payments impact your credit score and access to credit?

How many points can your credit score drop if you miss a payment?

If you miss a payment for 30 days, it can have a major impact on your credit score. On-time payments are one of the major contributing factors to where your credit score sits. If you have great credit and you miss a payment that’s more than 30 days due, it can take 100 points off your score. This can mean a lot when it comes to taking out loans.

How long does a missed payment affect credit score?

A missed payment can affect your credit score for up to seven years. It stays on your credit reports throughout these years from the initial date of non-payment. Even if you make repayments, this won’t disappear off your credit report.

What is a charge-off?

When a lender writes off your account as a loss, your account is closed and sent to a collection agency. It’s a big mark on your credit record as well, dragging your credit score down to the point of being considered poor credit.

There are a number of simple best practices you can employ to improve your credit score over time. If you follow these tips, you’ll be well on your way to a stable financial future!

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Loraine Couturier

Loraine Couturier is a Canadian that has been working as a freelance writer for the past ten years, specializing in topics that include personal finance, medical journals, and the online gaming industry. She is a published author, digital marketing expert and an authority in the fields in which she writes about.