What Does Past Due Mean? Late Payments And Credit Scores
Your credit score is made up of five factors, and payment history is the most important, representing 35% of your score. That means late payments are the worst thing for your credit score!
We’ll explain late payments and your credit score, what 30 days past due means, when a past due account gets sent to collections, the best time to pay your bills, and what to do if you accidentally missed a credit card payment.
Late payments and your credit score
A late payment can drop your credit score dozens of points, especially if your score was high, and it remains on your credit report for seven years. That’s not the only consequence. Late payments can also result in:
A late fee
A shut-off notice
An increased interest rate
What does account past due mean?
A past due balance means you didn’t pay a bill by the due date. Fortunately, many creditors and service providers offer a grace period ranging from a few days to 30 days past the due date. If you pay the bill within the grace period, you may not face any or all of the consequences of making a late payment.
Most creditors report information to the credit bureaus every 30 days. If you can pay your bill after the due date, but before those 30 days are up, the late payment likely won’t end up on your credit report.
After 30 days, if no payment has been received, your account is considered past due. Most creditors will try to collect payment themselves, calling, emailing, and sending notices that your payment is late. If you fail to respond after 120 to 180 days, your account is considered delinquent, and many creditors will send your account to collections. Being sent to collections will show up on your credit report, drastically lower your score, and remain on your report for seven years.
When to pay your bills
When to pay your bills depends on how you pay your bills. If you mail in a check or money order, it’s best to send payment a full week before the due date. The day before the due date is fine if you pay directly to the creditor. The due date is a bit risky; an issue with the site or your internet service could prevent you from making the payment.
If you pay bills through your bank, ask how the payments are sent out. Not all vendors take a direct deposit payment from a bank. In that case, the bank sends a paper check through the mail, meaning you need to make the payment a week before the due date. The day before the due date is fine if it's a direct deposit.
There are a few ways things you can do to make sure you don’t forget to make a payment:
Set up a recurring alert on your phone or computer for each bill's due date a week to a day before (depending on your method of paying). Be sure you set the alert for a time when you’ll be free to make the payments.
Set up auto-payments through the vendor or your bank.
Write the due dates on a calendar that you see every day.
What to do if your payment is late
What if your credit card is past due? You can pay your credit card bill after the due date, and that goes for any bill. If you’re simply forgetful, the tips above can help make sure you don’t make another late payment. But if your payment is late because you don’t have the money to pay a bill, there are some steps you can take to help the situation.
The first and most important thing you can do if you forget to pay a bill or don’t have the money to pay it is contact the creditor. They may be willing to work with you, but if you don’t call and explain your situation, they’ll just proceed with whatever their policy is for late payments.
Some creditors allow you to choose your payment date. Spreading your bills out across the month can help if you have a cash flow problem. If you have a hard time prioritizing paying your bills over discretionary spending, pay your bills as soon as you receive your paycheck, regardless of the due date. You can’t spend what you don’t have!
Upwardli can help
Upwardli has created lots of resources that can help you understand credit scores, budget your money, build and improve your credit score much more.
