When it comes to maintaining a good credit rating paying your bills on time is a must. However, what happens when a simple mistake is made and you forget to send in a payment by the due date? What if a financial emergency arises and you have to wait until the following pay day to take care of a monthly bill? Will your overlooked or postponed payment undo all of your hard work and trash your credit scores?
When a Payment Is Considered Late by the Credit Bureaus
What your lender considers to be a late payment and what the credit bureaus consider to be a late payment are not exactly the same. This could potentially be good news if you find yourself in a situation where you have forgotten to make a payment by the due date. You might wind up owing a late fee on a slightly late payment, but the account will not necessarily be reported as past due to the credit bureaus.
You may be worried that your lender will report you as late to the credit bureaus (Equifax, TransUnion, and Experian) if you are even a single day past due with your payment. Yet in reality being 1 day late, 3 weeks late, or even 29 days late should have no negative impact upon your credit whatsoever. Unless you are a full 30 days late with your monthly payment then the delinquency should never show up on your credit reports.
The credit bureaus do not allow lenders to report accounts as late unless a payment is 30 days or more past the due date. In fact, if a lender reports you as late when you are not a full 30 days beyond your due date then it is a violation of the Fair Credit Reporting Act (FCRA) due to the fact that the lender is reporting incorrect information. A creditor cannot tell the credit bureaus that an account is 30 days late when, for example, the payment is only 10 days late. Incorrect information such as this can be disputed with the credit bureaus – either on your own or with the help of a professional.
When a Payment Is Considered Late by Your Lender
It is worth noting that just because a late payment is not going to be reported to the credit bureaus yet that does not mean that your lender will not assess a late fee on your account. With some lenders and credit card issuers when you are even a single day past your due date a late fee may be added to your account. Mortgage lenders will generally have a 15 day grace period before a late fee is assessed (though you should verify this fact with your own mortgage provider).
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Bills Which Do Not Appear On Your Credit Reports
If you are overextended financially and wondering how late a bill can be before it damages your credit keep in mind that juggling bills can be a slippery slope. Your best bet is to try to both reduce your spending and, if possible, increase your income as quickly as possible in order to get out of this cycle before your credit scores take a hit.
Also Read: Unexpected Times Credit Matters
However, if you are temporarily experiencing a reduction in income, an illness, or going through hard times due to another reason keep in mind that there are certain bills which generally will not show up on your credit reports at all unless the account goes into default. For example, monthly utility bills such as gas, water, cable, electricity, and your mobile phone probably will not appear on your credit reports.
If you have to make the unpleasant choice of which bill to pay this week and which bill to pay later you might want to focus on keeping the accounts which do appear on your credit reports on time. Remember, however, if a utility account gets handed over to a collection agency then the account can still show up on your credit reports and would most likely have a negative impact upon your credit scores at that point.