Does A Late Credit Card Payment Affect My Credit Score?

Why late credit card payments may leave a black mark on your credit report, and how to avoid making late credit card payments.

Many of us have been late with a credit card repayment in the past, and can attest to the fact that it’s not a good feeling. But does a late credit card repayment affect my credit score? And if it does, how bad will the damage be?

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Does a late credit card payment affect my credit report?

The short answer is that yes, your credit report will most likely display any repayments which are 14 days overdue or more. Multiple missed repayments on the same credit card debt will count as separate late payments, and will be recorded as such on your credit report.

There are two types of late payments that affect your credit report, according to credit-reporting bureau Equifax:

  1. Late payment: Payment was more than 14 days late past the due date. Late payments are classed as “repayment information” and they stay on your credit report for up to 2 years.
  2. Default: Payment was more than 60 days overdue and the due amount was $150 or more. Defaults stay on your credit report for up to 5 years.
  3. Serious credit infringement: Payment was more than 60 days overdue for $150 or more, and lender has sent a written notice to your last known address but you have not contacted them or paid the debt. Lender waits 6 months after sending notice, then lists infringement on credit report. Infringements stay on your credit report for up to 7 years.

Both late payments and credit defaults have a negative effect on your credit rating, but defaults are potentially worse due to the fact that instances of overdue debt are not removed from your credit report, even after they’re paid. This can negatively impact your credit rating in the short-term and continues to make you a less attractive lending prospect as long as it remains on your credit report.

Before listing a default on your credit report, your credit card lender must send you a written notice asking you to repay the overdue debt and warning you that if you don’t pay it now, they will list the default on your credit report.

Making one late payment on its own is not enough to ruin your credit card – if you repay it and make your repayments on time from that point on. But a number of late payments on your credit report is a sign of significant financial stress or just plain bad money management skills, so it may make lenders reluctant to approve you for a loan or a credit card in the future.

It’s not just late payments on your credit card that matter, either. While late repayments can only be listed if they were on a credit card or loan repayment, if you miss a telco (phone or internet bill) or utilitie (water, electricity, and gas) payment by 60 days or more, this can also be listed on your credit report.

Keep in mind that late payments are just one thing that affect your credit rating and show up on your credit report. Find out how to check your credit report here, and follow our tips for improving your credit rating here.

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What if there was an error on the bill?

Any debt that you don’t pay is most likely going to present a problem in your credit report; regardless of any sort of clerical error regarding the bill itself. It is usually better to simply pay the bill and ask for a refund of the amount you are disputing from the company charging you the bill (e.g. your credit card provider or utilities provider).

What to do if you cannot afford to pay a credit card bill

If you cannot make the minimum repayment on your credit card bill, don’t sit around twiddling your fingers. It’s important that you get in touch with your credit provider right away and tell them you are experiencing financial hardship. If you talk to them before you miss a payment, you might be able to avoid having an overdue debt added to your credit report.

Find out what their procedure is to help you as a borrower to repay your debt. Credit lenders are required to offer you a reasonable repayment plan that takes into account your other expenses such as rent or mortgage repayments, groceries, fuel or public transport, and utilities bills.

It’s always a good idea to ask for free help when you are struggling. Talk to a free financial counsellor through Financial Counselling Australia. Don’t be fooled by debt help that is not free, such as debt solution services.

Does a late credit card payment affect my balance transfer?

Yes. If you have a balance transfer, making a late payment can result in the termination of the promotional balance transfer offer. So you lose out on the 0% interest rate that attracted you to the balance transfer in the first place, which is replaced by a stunningly high interest rate (the revert rate).

As with any other credit card, making a late payment on a balance transfer puts a black mark on your credit report and may lower your credit rating.

When you make every monthly payment on time and repay the entire balance of your balance transfer before the promotional period ends, you demonstrate your willingness and ability to repay a credit card. This positively affects your credit rating and looks good on your credit report.

If you’re considering making use of a balance transfer, make sure you’re choosing the best product for your individual circumstances.

The table below displays a snapshot of credit cards with 0% balance transfer offers on Canstar’s database, with links to providers’ websites. These results are sorted by the length of the 0% balance transfer period (longest to shortest), then provider name (alphabetically).

Compare Balance Transfer Credit Cards

How to pay off your credit card on time

If you’re already in debt and finding it difficult to pay your credit card bill each month, you may want to follow our 7-step guide to getting out of credit card debt:

  1. Work out how much debt you are actually in.
  2. Pay all expenses from your debit account only.
  3. Pay your most important expenses first (rent, groceries, credit card bill, fuel or public transport, electricity bill, phone bill).
  4. Do a written budget. (See our guide to writing a budget here.)
  5. Put your outstanding debt on a balance transfer credit card.
  6. Set up a repayment plan.
  7. Ask for financial help.

When possible, pay more than the minimum repayment to repay your credit card debt ASAP. Check out our 5 tips to pay off your credit card faster here.

If you’re on a credit card with a high interest rate and you haven’t made your payments on time, chances are you are paying a lot more than you need to in interest charges. Consider switching credit cards to a Low Rate or Balance Transfer card (and pay off your debt). Once you’ve repaid your entire credit card debit, you might simply close the account. Studies show Australians prefer the safety of using debit cards, anyway.

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