How Long Do Missed Payments Impact Your Credit?

In modern America, the average adult has to deal with about a million little things every single day. Between work, kids, meals, household chores, and trying to find five minutes to take a breath, it can be easy for a pending credit card bill to occasionally slip your mind.

Thankfully, a momentary slip won’t typically have credit score impacts, so long as you rectify it right away. In most cases, credit card issuers won’t report a payment as delinquent until it has become 30 days overdue. This means missing a due date by a few days, or even a couple of weeks, typically won’t cost you more than a late fee.

Once you pass that 30-day mark, however, the story changes. Most issuers will report payments that are more than 30 days late as delinquent to the credit bureaus. Since your payment history is 35% of your FICO credit score, delinquent payments can cause your score to take a significant hit.

On the plus side, that payment mistake won’t haunt you — or your credit score — forever. In 1970, the Fair Credit Reporting Act (FCRA) became law, laying out many of the rules and regulations regarding what information can (and what information can’t) be reported by consumer credit bureaus. Among the many consumer protections laid out by the FCRA are those that regulate the length of time negative information can remain on your credit reports.

Most Negative Items Last for 7 Years

In general, most negative items must be removed from your credit reports after seven years, including delinquent payments, defaulted loans, foreclosures, and charge-offs. The main exceptions to this limit are certain bankruptcies, which may remain for up to 10 years, and hard credit inquiries, which tend to fall off your reports after two years. Other exceptions may apply for cases in which a specific state’s statute of limitations supersedes the FCRA guidelines.

Overall, the time limit for negative credit report information will start from the time the incident occurs. In terms of delinquent payments, the seven years typically begins from the date of delinquency, or when the payment is first reported as delinquent. While outdated credit report items should automatically come off your credit report when they expire, few systems are perfect, and expired information may occasionally fail to be removed.

You can dispute outdated items with the credit bureaus in cases where the information doesn’t automatically come off your credit reports after its expiration date. Disputes may also be effective in cases where a payment was mistakenly reported as delinquent or cannot be proved as delinquent by the information furnisher. Many consumers have seen success removing outdated or unsubstantiated accounts by working with one of the best credit repair companies, as they have the experience to make the process as hands-free as possible.

Due to the fact that each credit bureau operates independently, it’s important to check all three of your primary credit reports to ensure the expired information has effectively been removed from each report. It’s difficult to predict which credit report a future lender may use to check your creditworthiness, so your best bet is to keep all your credit reports in the best shape possible.

The Impact to Your Credit Diminishes Over Time

If seven years seems like a long time to wait for your credit score to recover, you’re in luck; under most credit scoring models, negative items will start to lose their credit score impacts as they age. So, the older a negative item gets, the less influence it will have on your credit score. This means a delinquent payment could stop dragging down your credit score well before it comes off your credit report entirely.

How does it work? Basically, most credit scoring models weight information differently depending on its age. The more recent the information, the more weight it receives when your credit score is calculated. In essence, 12 months of on-time payments can mean more to a potential lender than a four-year-old delinquent payment, and this preference is typically reflected in your credit score.

So, for those looking to rebuild credit, avoiding credit can actually be a mistake. For example, avoiding new credit means your credit score is calculated only using that old, negative data, whereas opening — and responsibly using — one or two credit cards for bad credit can help rebuild positive payment history, reducing the overall impact of older delinquencies or other negatives.

Of course, the key here is to make sure your recent payment history is a positive one. Adding new negative items to your credit report will not only drag your score back down, but it can also be a big red flag to potential lenders that your past financial problems may not be solely in the past.

Automated Payments & Other Tricks to Avoid Relapsing

If your world is simply so busy that remembering every little bill can be overwhelming, a number of resources are available to take the work out of making on-time payments. Most banks offer automated bill paying, for instance, which can be setup to automatically pay your credit card bills each month. You can select the date and amount, and let your bank account do the remembering.

For a bigger-picture solution, you can try any of the wide variety of budgeting and personal finance apps available on the market today. With options for bill tracking, balance reporting, and a real-time, bird’s-eye view of all of your accounts, these products can often provide an all-in-one solution for staying on top of all the facets of your personal finances, including both your budget and the factors that influence your credit score.

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