How Late and Partial Payments Affect Your Credit Score

March 10, 2024

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You may already know that late payments can hurt your credit score. But did you know that sending in a partial payment – any amount less than the full or minimum payment requirement – could also result in a ding on your credit report? That’s because some creditors may report a partial payment as a late payment depending on the type of debt you’re dealing with.

If you ever find yourself falling short or behind on payments, communication with your lender or creditor is key. Be proactive: Contact them to try to work out a solution. Some things you can try to arrange include:

Asking if you can make a partial payment. If you just send in a partial payment without any explanation, there’s a good chance you will be penalized. That means you could rack up late fees or other penalties. See if you could work with your lender, so that your partial payment won’t be treated as a late payment.

Asking to skip a payment or change the due date. If you’ve been timely with your payments thus far, there’s a chance your lender may move the payment date, giving you a little more breathing room.

How amenable lenders are to these alternative arrangements depends entirely on their policies. They may consider factors such as your credit history and the type of debt you’re dealing with. If you’ve been struggling with making payments month to month, you may want to ask your lender if they provide any hardship assistance programs that could help you get back on track.

Understanding grace periods for different types of debt

Consequences for late or partial payments vary depending on the type of loan. Here are some common ones to consider.

Mortgages

It goes without saying that you should always strive to make your mortgage payments on time. However, many lenders do offer a grace period during which you can send in a payment without being considered delinquent. The length of the grace period will vary from lender to lender, but it's usually around 15 days.

After that, you’ll be subject to a late fee, which is typically a percentage of your monthly payment. Keep in mind that late or missed payments could have serious consequences including foreclosure.

Car Loans

Grace periods for a car loan will vary depending on the lender, but many banks may give a 10-day grace period before counting a payment as late. After that, you’ll likely incur a late fee. Depending on your lender’s policies, if you still haven’t paid by the time your next payment is due you may have defaulted on your car loan, which can result in your car being repossessed.

Credit cards

Credit card grace periods also vary depending on your issuer. Generally, you’ll get at least a 21-day window – from the time your bill is sent to your payment due date. You have the option to make the minimum payment amount or pay your bill in full.

As long as you’re able to make the minimum payment, you can avoid late fees and penalties. But bear in mind that making only the minimum payment can result in interest charges, which can really add up over time. So it’s a good idea to always try and pay your credit card balances off in full and on time each month.

Good to know: Grace periods usually only apply to new purchases you’ve made on your card. Many issuers do not offer a grace period for cash advances; in other words, interest will accrue from the moment you take out the cash.

How do late or partial payments affect your credit score?

Late payments and partial payments that are treated like delinquent payments can be reported to credit bureaus 30 days after the payment due date (some lenders may not report late payments until 60 days past due).

Once a late or missed payment is reported to the credit bureaus, you'll see it reflected in your credit report. Late payments can have a serious impact on your credit score given that your payment history (i.e., your ability to make on-time payments) is the most significant factor in the calculation of your FICO credit score.

Good to know: A late payment can stay on your credit report for up to seven years. Together, both your credit report and score can affect your ability to take on new lines of credit and secure favorable borrowing terms.

Remember, if you do find yourself struggling to make timely payments, it’s best to be proactive about solutions. Reach out to your lender to discuss your situation and make arrangements. If late payments are a recurring issue, consider working with a nonprofit debt-counseling organization to help you get back on track.

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this website were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.