Have you ever imagined, What happens to credit when you make late payment? This is something that is important to know before you start using credit cards.

Even if you are an on-time payer, still it is good to know what is on the other side.

Paying bills is a mood-killing activity that happens every month in everybody’s life. But there are no choices. If we need something, we have to pay for it.

Then what if you forget to pay it on time? I’m pretty sure that, it has happened to every one of us at least once.

A late payment will always charge you certain amount of money depends on what product or service you use.

When it comes to credit cards, it is more critical. Every time when you miss the due date, they will charge you a late fee that is anywhere in the range of $25 to $35.

But, that is not the end. You may even see your interest rates go up.

Late payment and policy violations

What happens to credit when you make late payment - Policy violations

What happens to credit when you make late payment – Policy violations

When you apply for a credit card, you will sign up with policies. According to the policies, you are promising that you will make all the payments on-time.  So, if you fail to make even one payment on-time, you  are breaking the agreement.

That is a violation of the contract with your banking institution. This is the way your credit issuer sees it.

In this article, we are going to focus on credit cards. I’m going to disclose what happens to your credit when you make a late payment.

What happens to credit when you make late payment?

What happens to credit when you make late payment

What happens to credit when you make late payment

Possible after effects of late payments

  1. Creditor will definitely charge you a late fee
  2. Your interest rates may go up
  3. Late payment will show up on your credit reports
  4. Your credit score may decrease

These are the major after effects of a late payment on credit cards. I’m going to elaborate all four of them in detail.

#1 Late credit card payment fees

What happens to credit when you make late payment - Late payment fees

What happens to credit when you make late payment – Late payment fees

We had already had a brief discussion about this in the beginning. But, that was a minor concern when it compared to others in the list.

Like I said, the creditor will charge you anywhere in the range of $25 to $35. But this may vary depends on your available credit limit or money that you are owing.

What if you continues to miss payments! That is going to be even more critical then. Your late fee may increase from the standard rate. Continuous missing payments will be a black mark on your credit history. Your creditor may even ban your account.

#2 Increase in interest rates

Increasing Interest Rates - What happens to credit when you make late payment

Increasing Interest Rates – What happens to credit when you make late payment

The increase in the interest rates depends on the creditor’s policies. The creditors may even penalize you for a late payment. Usually, the penalty APR for credit cards is as high as 29.99%.

Sometimes it could be worse. For example, if you are using a balance transfer credit card with a promotion of 0% interest. In that case, late payments may lead to canceling your promotions. And the interest rates may go to the normal rates instead of 0%.  That is a huge loss.

These are the possible effects on your credit card interest rates if you miss due dates. This may vary depends on the Financial institution.

#3 Late payment will show up on Credit Reports

This is a worse case scenario. If your payment due is more than 30 days late, the creditor will notify it to the credit bureaus. As a result, this late payment will show up on your credit reports.

The next thing that I’m going to tell you, will give you a shock. The late payments on your credit reports could stay there for at least seven years. That is horrible.

But this could happen only if your past due date is more than 30 days late. Now you have a question arise, “what if I pay the due amount within 25 days?”

What happens to credit when you make late payment- Credit score decrease

What happens to credit when you make late payment- Credit score decrease

#4 Decrease in Credit score

Just one late payment is enough to drop your credit score. A 35% of your credit score depends on your credit history. So, if there is any late payment history on your report, that will also lead to decrease your credit score. It depends on how late or how frequent  you make late payments.

Credit score and history will always be a matter when you go for buying a house, car, etc. Once the late payment is marked in the history, then you will struggle a lot.

Recommended Solution to avoid late payments

The best way to make sure you pay bills on time is setting up the Auto Pay or Pre-Authorized Payment options. This is available with pretty much every credit cards.

The process is pretty simple. The system will process the payment itself before due dates. This way you can stay out of payment troubles.

What else I have for you

What else I have for you - What happens to credit when you make late payment

What else I have for you – What happens to credit when you make late payment

To prepare this article, I have visited a couple of similar articles in the other websites. What I wanted to do was to collect the questions that are asked in the comment. The main intention of this article is to help people to find the best answer for their questions.

So, I thought this was the best way to gather questions. Now, I’m going to answer those questions through this article.


#How can I improve the credit score after a late payment?

The answer to this question is pretty simple. Once you have made a late payment, definitely your credit score will drop. The best way to bring your points up is, never miss anymore due dates on any accounts.

Paying bills on time is the best way you can improve the credit score. Even if it is phone bill or electricity bill, whatever it is.

#How to reset the penalty interest rate?

As we discussed earlier, late payment may lead to an increase in the interest as well. In this case, the best way to get rid of this is the same thing that we discussed in the previous question. Yes, pay your bills on time.

Once you have made 6 months of on-time payments, your creditor will require to reset it. Then you are free to go with the normal interest rates. But, make sure not to miss any payments.

#What if I’m late by 1 day?

That is an interesting question. Even if you late 1 day or 25 days, the result is same. You will have to pay the late fee. Also, you will see a decrease in your credit score, sometimes not. That depends on the policies of your banking institution. But if you are late for more than 30 days, the results will be worse.

Request to waive the fee

You can also request to your bank to remove the late payment fee. Once you have noticed that you missed a due date, pay it as soon as you can. Then call the Bank. Make sure to be nice to them and apologize for the late payment.

If you have luck, they might even reduce the late fee. Especially, if you are late for the first time. But, that is not 100% guaranteed. Does it depend on how you place it.

#What is mean by Maxing Out a credit Card? How that affects credit rating?

That is an important question that I found online. People have already answered that question in their place. But I would like to point out that in this article. You will see how important it is.

If you have used 75% or more of your credit limit, that credit card is maxed out. Also, your card will be maxed out when you make a late payment. Some people goes over the limits, that is even worse. This will reflect in your credit rating.

If you have poor credit rating, that affects the credit scores too. So, if you spend over 75% of your credit limit, that will affect the credit rating and score as well.

Now you might be thinking, what is the significance of this rating? That is a good catch. Credit rating plays a significant role when you apply for a home/car loans. Even though you have a good credit score, a bad credit rating will ruin your dreams. The loan issuer will always check the rating before they approve it.

#What if I have more than 1 credit card and just one maxed out?

This is an important question. Everybody should know the answer to this.

Suppose you have 2 credit cards, one of them is maxed out because of over limit usage (over 75%). The 2nd card is under the limit. And you haven’t missed any payments on both cards yet.  In this situation, your credit score may be good. And if the average usage is under 75%, your credit rating would be good too.

I will show you another example.

If you have 2 credit cards one with $10,000 credit limit and other with $1,000. Suppose your $10,000 card is maxed out. Of course, your credit rating would be poor. But, if the $1,000 is maxed out and the another one is fine. In that situation, the credit rating would be good.

#What is APR?

APR stands for Annual Percentage rate. We can call it as a standard unit for measuring the interest.

If you divide the APR by 12, you will get the monthly interest rate. Then you multiply this monthly rate with average daily balance. You will find the interest charges to be paid.

Usually, credit cards have separate APR for balance transfers and cash advances.


There are no articles in CAD Economy has a conclusion. We are always researching on these topics. If we could find anything new, we will definitely update that here. I hope the article was useful to you. If you have any comments/questions/feedbacks, please type it below.


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