Dear DHB,
Late payments remain on a credit report for seven years. If an account is still open when the seven years are up, only that late payment would be removed. Open accounts in good standing remain on your report indefinitely. Once closed, an account with no late payments will be removed 10 years from the date it was closed.
The status you mentioned indicates that the account was not brought current prior to being paid off and closed. In this case, the entire account will be removed seven years from the date of that missed payment, or seven years from the original delinquency date. Since the late payment occurred in March 2019, the account should be removed no later than the end of March 2026.
How Can Late Payments Impact Your Credit Scores?
As time passes, the late payment will have less of an effect on your creditworthiness. So, if you miss a payment, the most important thing to do is to bring the account current, and then continue to make all payments on time going forward.
Your payment history is the single most important factor in your credit scores. Even one missed payment could have a significant negative impact on your credit scores initially, but that impact will diminish over time.
Credit scoring systems reflect patterns of behavior. One stumble along the way is not likely to have a long-lasting impact on credit scores. If you continue to use credit wisely and demonstrate that you are managing it well, your scores will begin to bounce back.
After a short time, it will become clear that the late payment was an anomaly in an otherwise pristine credit history, and your positive payment history since that time will offset any negative impact it had on your creditworthiness.
How Can I Improve My Credit?
If you've had other negative items in your credit history, such as bankruptcies or collection accounts, rebuilding your scores may take a little longer—but it's not impossible. Here are some steps you can take to recover from past credit difficulties:
- Review your credit reports. Order your free credit report from each of the three credit reporting companies through AnnualCreditReport.com. Review them carefully and make note of any accounts that show past due or have an outstanding balance.
- Bring any past due accounts current. If you have any past due accounts on your report, bring them current as soon as possible. Some newer scoring models exclude paid collections from the score calculation, so paying off a collection account could help your scores right away.
- Pay down credit card balances. Your credit utilization ratio is the second most important factor in credit scores, right after payment history. If you have high balances on credit cards, make a plan to start paying them down. A utilization rate of no more than 10 percent is ideal.
- Order your free credit score from Experian. When you get your score from Experian, it will come with a list of the risk factors that are impacting you the most. This lets you know what you specifically can improve on to increase your scores.
- Sign up for Experian Boost®ø. This service lets you add your on-time utility, cellphone, and streaming service payments to your credit report, which can help boost your Experian credit score right away.
How to Avoid Late Payments
You can avoid late payments by signing up for payment and balance alerts from your creditors. Notifications can generally be sent by text, email or push notification from a mobile app. You may be able to customize the alerts you receive to notify you a set number of days before your bill is due, when a payment is received and when it posts to your account.
While alerts are helpful, signing up for automatic payments is the best way to ensure you don't miss a payment. Since autopay pulls money directly from your linked bank account, you need to make sure you have enough money in your account to pay any bills.
As a last resort, if you're unable to pay all of your bills on time, see if any of your creditors offer a grace period. In some cases, you may be able to pay a bill a few days late without incurring additional fees or interest. And as long as you pay the bill within 30 days of the due date, there won't be any negative impact on your credit.
Thanks for asking.
Jennifer White, Consumer Education Specialist
