If there are two truths about credit scoring, it’s that paying your bills on time is a must, and there’s no shortage of complicated industry jargon.
You probably already understand the former, which is the importance of keeping your credit reports free and clear of late payments. The latter may be another story.
One such industry term is payment status, which is one of many ways companies that report your information to the credit bureaus can choose to share negative information, when warranted, about your accounts. The most common of all of the payment status options is the “late” payment, which itself is a bit complicated.
When Can a Lender Report My Late Payment?
This question is the source of much confusion and, frankly, incorrect blogging. The credit bureaus have a different definition of “late” than the one you’ll find in Webster’s Dictionary.
Before a late payment can be reported on your credit reports, two things must occur: First, a lender must choose to communicate the information about your late payment to the credit reporting agencies, or CRAs. Second, the CRAs must accept that information.
Credit reporting is a voluntary process. Lenders do not have to furnish your account information to the CRAs. Even if a lender does opt to report your accounts, it is under no legal obligation to report late payments as soon as they occur.
So while many lenders do report late payments to the CRAs as soon as they’re allowed to, other lenders may wait until a customer is 60 or even 90 days past due before reporting the delinquency.
If a lender does choose to report late payments, it must follow the CRAs’ credit reporting guidelines. Equifax, TransUnion, and Experian, the three major credit bureaus, have an industry-wide policy with regard to late payment reporting. Per the policy, your lenders aren’t allowed to report accounts as being late until a customer is at least a full 30 days past the due date. There’s no systemic option to report accounts as being past due by one to 29 days. This is where the definition of “late” diverts from the credit reporting guidelines.
If your payment is even one day late, there could be other consequences, of course. Yet while your lender might charge you a late fee, or your card issuer could close your account, your credit reports cannot reflect a late payment status until the due date has come, gone, and 30 more days have passed.
Late Payment Status Credit Reporting Options
The credit industry standards only allow for the following late payment statuses:
- 30-59 days late
- 60-89 days late
- 90-119 days late
- 120-149 days late
- 150-179 days late
- 180 days late or more
Lenders must choose from the above options when reporting any late payment to the CRAs. As you can see, there’s no option available for accounts that are late, but less than 30 days late. Accounts that are late but not a full 30 days late must be reported as still being “current,” even though they really aren’t.
Your credit reports also cannot reflect a more serious delinquency status until you’ve officially crossed over the threshold and into the next category of lateness. You could be 59 days late on an account and your lender cannot report you as being 60-89 days late until at least one more day clicks off the calendar. The same goes for every one of the above late payment ranges. You can’t be reported in any of them until you are squarely within the time frame.
How Long Will a Late Payment Status Stay on My Account?
If your account is at least 30 days late and you have one of these late payments on your credit reports, you’re stuck with it for as long as seven years.
But, if you “cure” your account — meaning you get back to current with your payments — then the lender has to stop reporting you as being currently past due and show your account as being in good standing. The late payment will then drop into a section of your credit report that shows “historical” late payments, where it will sit for the next seven years.
More by John Ulzheimer:
- 10 Things You Won’t Find on a Credit Report
- Here’s How Credit Scoring Models Actually Work
- Which Bills Affect Your Credit Score (and Which Ones Don’t)?
John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. The author of four books on the subject, Ulzheimer has been featured thousands of times over the past decade in media outlets including the Wall Street Journal, NBC Nightly News, The Los Angeles Times, CNBC, and countless others. With professional experience at both Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.