Why Does One Mistake Hurt Your Credit?

One bad grade on your report card. One speeding ticket. In the grand scheme of things, does it really matter all that much? Probably not, but in the short term, you probably felt the consequences of such small mistakes in the form of a lowered grade-point average or a higher insurance premium.

It’s the same with credit. Having one late payment on your credit report could knock a chunk of points off your credit score, despite the years of pristine payment history you may have built.

What’s the Big Deal?

How a late payment impacts your credit score depends on the scoring model — some place less weight on isolated incidents — but payment history often has the biggest impact on your credit score.

“It’s simply because it’s predictive,” said Gerri Detweiler, Credit.com’s director of consumer education. “One late payment indicates that you’re more likely to fall behind on other bills.” The analytics companies that build these scoring models crunch data that show that relationship, which is why you could see your credit score plummet after a missed bill.

Sometimes it’s an indication that you’re running into financial trouble, and sometimes it’s an honest mistake, but lots of times, sloppiness plays a role.

“If you’re disorganized, you’re more likely to miss payments,” Detweiler said. “And it’s more likely to become a pattern.”

Now What?

Once a bill is 30 days past due, it gets reported to the credit reporting agencies. It goes on your credit report, and it can stay there for the next seven years.

Don’t get too discouraged. It sounds like a long time, but as time goes on, that missed payment will have less of an impact on your credit score.

Four years ago, Detweiler ended up with a ding on her credit report after she found out (too late) that a payment didn’t go through.

“Whenever I get a credit score, it never really mentions I’m being penalized for it,” she said.

You might also be able to get it removed if you act quickly. If you have a solid history of making payments on time and have a good reason for missing one bill, you can reach out to your lender, and they might take it off your report. It doesn’t hurt to ask.

More than anything, you should focus on making sure a single mistake doesn’t become a habit.

“It’s highly annoying but these things do happen,” Detweiler said. “It’s not good, but you know, do what you can, and focus on making payments in the future.”

If you want to see how late payments are affecting your credit scores, the free Credit Report Card will give you a letter grade on all the major credit scoring factors, plus two credit scores that are updates monthly.