If I am late on only one payment, will it hurt my credit?

Collections--qmOne isolated late payment can impact your credit, but it depends upon how late you were on the payment, which credit score is used and just how late you were.  Some scores will give you a break on an isolated late payment, while others will not.

For example, an account 120 days late is much worse than an account 30 days late. And, credit scoring models are much less forgiving when you are delinquent on a continuing basis.  The score drop also depends upon your previous score, the higher the score the larger the possible scores drop.  For example, a FICO score of 780 with an account currently 30 days late could drop a score much more than someone with a FICO score of 680.

The FICO score has been redeveloped many times and the latest version which was  introduced in 2009, named FICO 08, had changes more in the consumers’ favor.  In previous versions of the score, if you are late paying your bills 30 days or more, the score deducted points from your score. In the newest version, if the late payment is an isolated event and your other accounts are not late, the model doesn’t penalize you.  On the other hand, if this is one of many late payments, the delinquencies will have more negative impact than previously.

If the creditor/lender is using an older FICO version, the late payment can have more of an impact.  Other scoring models have made similar changes. Unfortunately, you won’t know which version the lender is using.

The key is to keep paying your bills on time.  This one late payment will have less impact over time.  The last 24 months’ of information has the most impact on the score. If you continue to pay your bills before they are due, your score will increase as long as everything else remains constant.

Last but not least…you have to be a full 30 days past the due date in order for a late payment to show up on your credit reports. That eliminates the chances of you simply forgetting to pay your bill. Point being, if you’ve got a late payment on your credit reports then you weren’t just a few days delinquent.

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, founder of www.creditexpertwitness.com and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  You can follow John on Twitter here.

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