Late Payments and Your Credit: Tips to Minimize the Damage

Laura explains what happens when you make a late payment, how your credit is affected, and gives tips to minimize the potential damage. Plus, she answers a question from a long-time Money Girl Podcast listener who’s wondering what to do about an account that accidentally became delinquent.

Laura Adams, MBA
8-minute read
Episode #482

If a creditor pegs you as late, but it’s in error, dispute it with the credit bureaus right away. Inaccurate or unverifiable information must be removed by law.

2.    Contact the creditor.

If you get your past due account settled, but are disappointed to get charged a late fee, contact the creditor to discuss it. If your payment was late by accident, such as getting lost in the mail, explain the situation and ask to have the fee credited.

Lenders and card companies typically want to keep good customers happy, so they may do you a favor—especially if you’re polite on the phone. Remember that customer service representatives have a lot of leeway but won’t be keen to help you if you’re in a panic or are rude.

3.    Pay all your credit accounts on time.

If your credit scores went down or you got hit with a high penalty APR after a late payment, be extra cautious about never being late again. If you make six months of on-time credit card payments, your issuer is required to reset your interest rate back to the pre-penalty rate.

Plus, your credit scores will slowly improve as you build a history of positive information and the late payment ages. Credit models tend to favor new data more than old entries, so be vigilant about staying on track.

4.    Set up automatic reminders

If you made a late payment because you don’t have a good system for paying bills, now’s the time to get organized. You could use a spreadsheet, calendar reminders, or smartphone app like Mint, Bills Monitor, or Evernote.

Many financial institutions allow you to create email or text notifications to remind you about an upcoming payment due date. This is a great way to make sure a deadline never slips past you.

My favorite way to keep tabs on what I owe each month is a simple spreadsheet. I list each obligation on a row and use columns for the merchant or creditor name, due date, payment amount, and month. As I pay each bill, I enter an “x” in the corresponding row under the current month.

I use my bank’s online bill pay to cut checks or transfer funds for each payment. Some are set up to pay automatically and some I manually approve before funds are sent electronically.

One strategy to make sure that you never miss a minimum credit card payment is to set it up to pay automatically. Even making the minimum payment helps you build credit. You don’t get “extra credit” for paying more, but it’s wise to pay your balance in full each month so you don’t have to pay any interest next month.

See also: The Statute of Limitations and 4 Options for Old Debt


About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a trusted and frequent source for the national media. Her book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show. 

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