What Happens to My Credit if I Miss a Payment?
If your finances are strained, you might need to prioritize some expenses and delay others until your budget allows. However, late or missed payments can take a toll on your credit score and overall financial health.
In some cases, you can prevent damage to your credit score from late and missed payments if you take steps to prepare. Read on to learn what can happen if you miss a credit payment and what you can do to protect your credit score.
If You Don’t Call in Advance…
Whether you were low on funds, forgot a due date or never made a payment, missed payments can affect your credit and finances in a few ways.
1. You May Have Negative Marks on Your Credit
A credit report represents your recorded financial history. Depending on the specific payment agreement/creditor, late or missed payments can lead to negative marks on credit reports. However, not all companies report to the major credit reporting bureaus.
Some companies do not report late or missed payments to one or more of the major credit reporting bureaus, which means that they won’t appear on your FICO credit history. However, creditors may use alternative credit reporting methods, so payment information may still be reported to third-party credit agencies.
Whether your creditor reports to the major credit bureaus or works with alternative bureaus, it’s a good idea to avoid negative credit usage behaviors in order to keep your account and your credit score in good standing.
2. Your Credit Score May Decrease
Your credit score is a three-digit number that reflects your creditworthiness, or the likelihood of debt repayment. If your creditor(s) report missing or late payments to the main credit reporting bureaus, your FICO credit score can decrease significantly. Late payments (more than 30 days past due) can also lower your score.1
3. You May Have to Pay More
If you have a bad credit score as a result of missed or late payments, you may have to pay additional fees, interest or other deposits in order to gain access to additional credit. Even if a creditor does not report payments to credit bureaus, you still may face extra fees, increased interest rates and/or related costs for missed or late payments.
If You Call in Advance…
If you think you’ll miss an upcoming payment, it’s essential to take steps in order to prepare, ideally before your payment due dates. While your specific situation may vary, calling your creditor(s) can help you avoid certain financial problems down the road.
1. You Could Work Out a New Payment Agreement
Some lenders may be able to accommodate certain borrowers facing financial hardship, such as the loss of a job, reduced income or related financial difficulties. Accommodations might include a payment deferment or forbearance, which typically involves delaying payments for a specific time period. Keep in mind that amended financial agreements generally do not absolve borrowers of their payment responsibility, so it’s important to resume payments as scheduled.
2. You Can Prevent Damage to Your Credit History
If your creditor offers a contract adjustment, like a payment deferment or forbearance, you can keep your credit in good standing during the adjustment period. Though such amended financial agreements generally do not negatively impact credit scores, you’ll still need to adhere to any new financial contract, including resuming payments as scheduled. By making your new scheduled payments on time, you can help prevent damage to your credit history and keep your credit in good standing in the future.
Missed Payment Call Scripts
Contacting your creditor is the first step to help protect your credit if you think you’ll miss a payment, or if a payment is past-due. You can customize the following call script when contacting creditors if you think you may miss an upcoming payment:
Hi, my name is ____. I’m calling because I’m not able to afford my upcoming payment of ____ due to a ______ (e.g. budget shortfall, loss of income or job, etc.), and I would like to explore any payment accommodations that may be available to me. I have been a loyal customer for ____ years, and I have a positive payment history with your company.
Even though it’s ideal to call creditors before a missed payment, you still may have options to help protect your credit score and keep your account in good standing. While it’s not guaranteed that company representatives may be able to waive late fee(s), it doesn’t hurt to ask! If your payment is past-due, use this customizable script when calling lenders:
Hi, my name is ____. I’m calling because of my past-due payment of ____. I was unable to pay due to a ______ (e.g. budget shortfall, loss of income or job, etc.), and I would like to explore any payment accommodations that may be available to me.
Additionally, due to my financial hardship, I also ask that you waive any late fees/costs related to the late payment. I have been a loyal customer for ____ years, and I generally have a positive payment history with your company.
1FICO. (2019). Changing the Score.
The information in this article is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial, legal or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.