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How Can I Save My Credit Score After a Late Payment?

by on July 28, 2013 · 19 comments

in Credit FAQ, Credit Repair, Sunday Reader Questions, US Bank, Video Blog Post

TPG Twitter follower Eddie made a very late payment on one of his credit cards and is worried about how it will affect his credit score:

“‪@thepointsguy‬ I accidentally forgot and paid my Club Carlson Business Visa bill 36 days late! How do I save my credit score?”

When I saw this tweet come in from Eddie I responded and told him to call US Bank and explain the situation. The quicker you catch a mistake with a bank or issuer, the better your odds are that they will give you a pass so it won’t have a negative affect on your credit.

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Getting a late payment dropped is critical because 35% of your credit score is payment history so making payments on time, even if it’s just the minimum amount, is crucial. Although you don’t have to pay your bill off in full every month, if you do it will certainly help the portion of your score that considers how much credit you are utilizing compared to your total amount of credit, which is another 30% of your total score.

In Eddie’s case, when he contacted US Bank they told him that luckily they don’t report late payments until 90 days past due for their business accounts. This is actually pretty generous, since most issuers will report a late payment right away or at least in the next billing cycle.

Mint.com lets you link all credit card and bank accounts so you know when payments are due and if you're getting hit with fees.

Mint.com lets you link all credit card and bank accounts so you know when payments are due and if you’re getting hit with fees.

I’ve had mistakes here and there where my checking account didn’t link properly or a payment wasn’t processed on time and I missed a due date, but since then I’ve learned that the best thing to do is set up autopay for every single account even if it’s just for the minimum payment. Keep in mind, autopay isn’t perfect. Even if your cards are on autopay, there can be mistakes, which is why I like to use mint.com. Through the website or mobile application you can link all of your credit cards and bank accounts and be alerted when payments are due or if there were any sort of fees charged to your account.

To avoid late or missed payments in the future, definitely set up auto pay for all of your accounts and if you have any questions about a payment, fee or charge call the issuer right away to try to get the problem sorted out. It never hurts to ask about getting a late payment dropped and if you’re a good customer most issuers will do it for you – especially for a first-time mistake. If you’re having trouble with the representative when you call, hang up and call again to get someone else or ask to speak to a supervisor. You can also send a letter in writing explaining your situation, but in general one missed payment should not ruin your credit and it should be pretty easy to get taken off.

If for some reason you lose your job and legitimately cannot pay your bills, you should call your credit card company and work out a payment plan. Always be proactive. If you’re reactive with credit card companies, you’re going to get drowned in fees and bad credit and once your credit dips it can be a long, difficult process to get it back in good standing. As it is, Eddie’s situation worked out because he took action immediately, asked for US Bank’s help and understanding, and ultimately has maintained his healthy credit score.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author.s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

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  • From Point A To

    A method I use to keep track of my payments is to set all of my credit card due dates to the same date (or as close as possible). That way I know that EVERYTHING is due at the same time each month.

  • http://www.travelwithgrant.com/ Grant Thomas

    It helps if you sign up for email and text alerts for every card.

    I agree with From Point A To, I have all my credit card payment due dates set for the first of every month.

  • SeaBee3

    Not sure where you got information about when the banks report but Chase, Amex, and Citi all do not report to the credit bureaus until 60 days ( Chase) or until the second statement after the missed payment. None of them report right away.

  • mizliz

    TPG I I’m in the banking compliance biz, and I need to point out that a financial institution is obligated by law to report payment history accurately. This means that, while they have the option to waive fees and can choose to report at 30, 60, or 90 days late (applying the same rule to all borrowers), they cannot report that you weren’t late when in fact you were. To do so would be a violation of FCRA.

  • Graydon

    And the greatness of carrying a lot of business credit cards shines! Not only are they easier to get if you have a decent sized business, the spends are simple (businesses spend a lot) and they don’t report to you personal reports (unless it’s a pretty serious default – apparently 60 days with US Bank). Also they help your UTL as the balances are not reported to your personal report so no need to try to keep the card reporting low. I just pay mine a couple of days before the due date thanks to several reminders I have set.

  • Sig999

    Can you please point out the section in the FCRA which obliges financial institutions to report late payments?

  • thepointsguy

    I’ve definitely had and heard of credit card companies waiving fees/reporting related to late payments. Where exactly does it say this would be against the rules?

  • thepointsguy

    Yea it helps to have one set date and make sure all autopayments pull correctly in advance

  • Paul S.

    5+ years ago when I was less methodical with my finances, I was late on a payment or two every year, probably a dozen or more late payments in as many years, usually 30 days late. In all those years, I’ve never seen a late payment on my annual credit report.

  • mizliz

    Fair Credit Reporting Act 623 (a)(1)(A):

    § 623. Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C. § 1681s-2]

    (a) Duty of Furnishers of Information to Provide Accurate Information

    (1) Prohibition

    (A) Reporting information with actual knowledge of errors. A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.

  • mizliz

    Sig999, Nothing in FCRA obliges FI’s to report late payments, that’s true. But if they do, the information must be accurate.

  • Rudy Rosenberg

    Keep in mind that it takes time to set up Autopay, and there will likely be a payment due in the meantime. It’s not instant.

  • Miles

    I’ve hesitated to set up Autopay for credit cards because, if a fraudulent charge shows up on my CC bill but it’s been / will be auto-paid, will I be able to get a refund for the fraudulent charge?

  • dynamicspartan

    This actually just happened to me on a forgotten balance on a Banana Republic store card. I was mortified, as I’ve never made a late payment.

    Long story short, they waived one of the late fees (there were two), then when I got through to the manager, she agreed to waive the 60 day delinquency report to the credit bureau. I was more than happy to accept this deal, as I was more worried about the hit on my credit score, than a $25 late fee.

  • Pingback: Which Credit Reporting Agencies Banks Use To Pull Your Credit Report – And Why It Matters | The Points Guy

  • Tim Mueller

    I had a finance charge on a credit card that was $1.14. I missed the payment and they charged me a fee of $1 the next month and another of $1 the next month for a total of $3.14 which I then paid off. So at this point I was 30 days past due and it was reported to the credit agencies and this scenario dropped my credit score significantly. Absolute horror story since now we are trying to get a mortgage. That $3.14 charge that I missed can end up costing me thousands.

  • Dee

    I just missed a payment with Citi and it is 33 days late.Can you tell me when does citi report late payment?

  • samboys

    HA, If you think banks actual care about the law or what the credit bureaus say. They can and will do what they want. And really, nobody is going to say a thing unless it’s reporting bad. .. .. Plus if it is a mistake, they didn’t really pay late. When I first set up my usbank credit card years and years ago, I had the bank set it up at the branch for auto payments. But the women didn’t actually send the papers through and CS would do NOTHING….I had to go into the bank and have her talk to them. Very rude CS….I don’t trust auto pay. I’d rather look at my accounts once a week to make sure charges are valid and make my payments so when my due date comes up it will already show zero owed.

  • Patrick Eamon

    I was late one day with a payment on my Citi card and my credit score dropped. They report right away.

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