Does Paying Bills Consistently Late Affect Your Credit?

Consistently paying your bills late may lower your credit score for years.
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It's not always easy to remember to pay all of your bills on time, but even one missed payment can negatively impact your credit score. If you consistently pay your bills 30 days or more past their due date, you could jeopardize your ability to sign a lease, get a mortgage or take advantage of a credit card with a lower interest rate. Late payment information could remain on your credit report for up to seven years, even if you've paid off the account balance.

What's Reported

Creditors will report your payment as being late if they receive it 30 days after the due date. Your credit report will reflect the amount of late payments for each account. The report will also show whether you were 30 days, 60 days or more than 90 days past due. In most cases, your creditors will not report late payments that they receive prior to the 30-day cutoff point. So if you consistently pay your credit card or car loan 10 days late, your credit score will not decrease.

Score Impact

Your payment history makes up 35 percent of your credit score. A recent history of late payments is more likely to decrease your credit score than late payments from a few years ago. Even a consistent streak of paying your bills 31 or 32 days late could significantly decrease your score. Any past due accounts that your creditors have turned over to collection agencies have more weight than a history of late payments. Collection accounts remain on your credit report for seven years.

Score Repair

It takes time to correct a low credit score that is mostly due to a history of late or missed payments. The best thing you can do is to start paying on time. Some people find that setting up automatic payments through a bank or the creditor helps. Others create calendar reminders or pay groups of bills on the same day each month. As your payment history becomes more consistent and on time, your score is likely to increase.

Multiple Delinquencies

If you have multiple accounts that you consistently pay late, your credit score is likely to suffer more damage. A person who is always late paying one bill out of five may have a higher credit score than someone who is always paying late on all five accounts. High balances on multiple delinquent accounts also contribute to a lower credit score. This is especially true if a number of accounts are reported as currently past due.

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