Late payments and your credit score

When you set up an account with a company, you’ll usually agree to make monthly payments. It’s important to meet these payments on time and in full. Otherwise, you may negatively affect your relationship with the company, and reduce your chances of getting credit with other companies in the future.

However, things don’t always go according to plan. Perhaps you’ve had a hectic month and the bills slipped your mind. Or maybe the car needed repairs and you don’t have enough money left over. Whatever the reason, if you’ve missed a payment or think you’re going to, there may be steps you can take to reduce the damage.

Can a late payment affect my credit score?

Your credit score reflects how reliable you are with credit, and it affects your ability to borrow money. Each company will calculate your score in their own way to decide if you meet their criteria. They do this using your credit history, details on your application form, and any other information they hold on you (for example, if you’re already their customer).

Some companies take late payments into account when calculating your score. This is because overdue payments can suggest you’re struggling to manage your finances. As a result, you might not meet some companies lending criteria.

The Experian Credit Score can give you an idea of how companies see you. It’s based on information in your credit report, and is the UK’s most trusted score*. If you’ve been late with payments, check your Experian Credit Score to understand how your ability to get credit may have been affected.

How much can a late payment affect my ability to get credit?

Credit scores weigh up lots of different pieces of information. So, if everything else on your report is favourable, a late payment doesn’t have to be a deal-breaker. However, it does depend on the credit you want and the companies lending criteria. Even if a late payment only reduces your score a little, it could take you beneath the lender’s cut-off point for approvals.

Sometimes, late payments can lead to a default or a County Court Judgement. These are likely to have a more serious impact on your credit score.

How long do late payments stay on my credit report?

If a late payment is recorded on your report, it will stay there for six years. However, its impact on your score will reduce as the record ages. This is because lenders usually pay more attention to your most recent credit history. As long as you keep up with future payments, you should see your score improve over time, making it easier to get approved for credit at better rates.

You can see what’s impacting your credit score by getting a copy of your credit report. If you want to access your report frequently, consider getting a CreditExpert paid subscription.

How can I remove a late payment from my credit report?

If there’s a good reason why you were late with a payment, such as redundancy, you can explain it to companies by asking us to add a notice of correction to your report. This can be up to 200 words.

If you think a late payment has been recorded on your report by mistake, we can investigate on your behalf. Get a copy of your Experian Credit Report first to check it for accuracy. If you find an error, get in touch with us. We’ll ask the companies to double-check their data and remove the record if it’s inaccurate. If they think it’s accurate, and you still disagree, we’ll help you figure out your next steps.

How can I deal with a late payment?

Of course, it’s best to avoid a late payment in the first place, but life can be unpredictable. If you can’t help missing a payment, you should contact the company as soon as possible. Explain your situation, as they may be able to agree a temporary solution with you. You might also want to get in touch with a debt advice charity such as StepChange.

If you do get a late payment recorded on your credit report, you can try and balance out its negative impact by taking steps to improve your score. You can keep track of your credit score with a free Experian account – it gets updated every 30 days if you log in.

Will I be charged fees and interest on late payments?

Companies often charge penalty fees and interest on overdue payments, so it can get quite expensive. Some companies will give you a grace period – this starts when the payment is due, and if you pay during this time you won’t be charged late fees. Check your contract with the lender to see if you have a grace period.

Some companies have tiered late fees based on how much you owe. However, there are legal restrictions on what you have to pay. For example, charges of over £12 for late credit card payments may be seen as unfair. If you think you’ve been charged too much, speak to your lender first. If you can’t come to an agreement with them, you may want to seek free advice from the Financial Ombudsman.

How can I avoid overdue payments?

Here are our top tips on how to make payments on time:

  • Check when your payments are due and if you have a grace period
  • Find out how long it’ll take for your payments to reach your lender, as some payment methods take more than a day to process
  • Automate your payments by setting up direct debits, or get reminders by text or email
  • Make budgeting easier by arranging to pay bills on your payday
  • If possible, set aside some rainy-day money for unexpected costs
  • You could choose to take out Payment Protection Insurance (PPI), which may cover your repayments if you lose your job, become ill or die. However, you should check the details carefully first, to ensure it’ll meet your needs
  • Only apply for credit you can comfortably afford

In the long term, you can get more control over your finances with CreditExpert paid subscription. CreditExpert can help you understand what’s affecting your Experian Credit Score – including late payments – and how to improve it.

*Most trusted’ based on 61% of 1057 respondents. ICM Unlimited survey June 2017.