What are late payments doing to your credit score?

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Team MONEYME|31 March 2023| 3-minute read

Late payments don’t do your credit score any favours.  They can signal to lenders that you might not be the best at staying on top of your finances.

But, if you’ve missed a few deadlines, don’t panic. You can make up for your mistakes with a handy hack or two.

Here, we take a look at how late payments impact your credit score – and give you some tips for regaining ground. 

What do late payments do to your credit score? ⏰

We’ll start with the bad news. According to Experian, one late repayment of your credit card can cause your score to drop by up to 22%. Make it two repayments, and you’ll take a hit of up to 26%. With late repayments within three months, the decrease jumps to 42%.

Here’s one tip to give you a breather: late repayments don’t do damage unless they’re at least 14 days past the deadline. Before that, they probably won’t impact your credit score.

How long does your credit score suffer? 😫

The percentages might sound scary, but the harm isn’t a permanent scar. Late repayments usually stay on your credit report for two years.

Defaults are more dangerous. They’re repayments of $150 or higher, paid more than 60 days late, and they hang around for five years.

All is not lost 🙏🏾

Now, it’s time for the good news. You can make up for your past mistakes. 

The first step? Make sure that, from now on, you repay on time, every time. Just as late repayments suggest you’re not in control of your cash, timely repayments suggest you are. 

That’s because, in Australia, we have a comprehensive credit reporting system. All your credit-related behaviour – good and bad – goes into your score. It’s important to be rewarded for getting things right. 

By the way, you’ll find other tips for bumping up your credit score over here and mastering your money here.

Struggling to change your ways? 😣

Change isn’t easy. So, we’ve pulled together a few hacks to get you going. 

First, set yourself reminders – in your phone, by your bed, on your mirror. Second, if you can, organise automatic repayments via direct debit. 

Third, if you have many debts, roll them into one. Instead of juggling multiple deadlines, you’ll make one repayment per month. Plus, you’ll likely negotiate a better interest rate. 

Still missing deadlines? 😱

Financial management isn’t always as simple as a few hacks. If you’re still missing deadlines, the trick is to communicate. 

Call your credit provider. Ask to set up a realistic repayment plan. Or, if things are tight, organise a financial hardship arrangement. That won’t affect your credit score. 

Keen for long term change? It might be time to dig deeper, and learn how and why your emotions are driving your behaviour with money.

Check your credit score now ✅

If you’re ready to get on top of your credit score, the first thing you should do is check where it’s at. 

You can check your score for free on the MONEYME App in seconds without affecting your score. You’ll also get detailed personalised score insights, be able to track your score over time, and get tips and tricks to help improve your score.

Keep checking your score regularly to help hold yourself accountable and track how your payments are impacting your score. 
Plus, right now by checking your score on the MONEYME App every month you automatically go in the draw to win $1,000 (a new winner is drawn every 3 months)!

Check your score for free

Do you know your credit score? Download the MONEYME app to check your score for free today.