Just one late car payment can have a significant negative affect on your credit score, but how much it drops depends on your specific credit situation when the event occurs. This is because your payment history makes up 35% of your FICO credit score, making it the largest of any factor that determines it. Your credit score should stay in good shape if you're consistently making all of your payments on time, but if the opposite is true, your credit score can drop in a hurry.
When Is a Car Payment Considered Late?
Technically, a vehicle payment is considered late when you miss the due date. When this happens, your creditor can assess a late fee. If you manage to pay the missed payment and the late fee within 30 days, you can typically recover from the missed payment and shouldn’t see your credit score take a hit.
Legally, your creditor can’t report any missed payments to the credit bureaus until it becomes 30 days past due. In a way, this time could be considered a “grace period,” but you shouldn’t make it a habit to miss payments or pay late fees every month. Even though your credit isn’t impacted as long as you pay before 30 days have passed, you would be costing yourself money every month.
Ways to Prevent Missing Car Payments
If you’re worried about staying on top of your car payments each month, the good news is there are ways you can help – you just need to plan ahead and find what works for you. Some tips to consider include:
- Talking to your lender – If you’re in the middle of an auto loan and find yourself at risk of missing a payment, the best thing you can do is talk to your lender before that happens. Some lenders may let you skip a payment and add it to the end of the loan term, or stack it on top of your next payment. Even if they can’t help, you know you tried and can consider other options.
- Choosing payment dates – If your lender allows you to pick the date of your payment, you can try to line it up around when you have other bills due. This way, you can make it easier to be consistent by having fewer dates to remember.
- Setting up reminders – If you’re like many Americans, you’re on the go constantly and on your phone. Consider putting in your payment dates as reminders on your calendar. This way, you can set up push notifications that can remind you when to pay.
The Bottom Line
It’s important you keep up with your monthly bills, no matter what they are. Just one missed payment could drop your credit score in a significant way. According to FICO data, a 30-day late payment could drop the credit score of somebody with a 780 credit score and no missed payments by 90 to 110 points. It can be tough to recover from a big hit like that to your credit.
If you’re in the market for a vehicle but worry your bad credit is keeping your from getting approved for a car loan, Drivers Lane can connect you to a dealership that will do their best to help you get financed. Once you complete our fast, secure, and simple auto loan request form, we’ll work to match you with a dealer near you that has the lending resources you need. Don’t fall asleep on us, get started today!