When Does a Late Car Payment Affect Credit?

Car payments play a significant role in an individual’s financial standing, directly impacting their credit health. Payment history is a particularly influential component in determining your credit score. Lenders and credit scoring models rely heavily on this history to assess your creditworthiness.

Consistently making on-time payments demonstrates financial responsibility, which helps build a positive credit profile. Conversely, late payments can signal a higher risk to potential lenders, potentially hindering access to future credit opportunities or leading to less favorable terms.

The Reporting Timeline

Creditors generally report late car payments to the major credit bureaus once the payment is at least 30 days past its due date. While a payment may be considered late by your lender a few days after the due date, it typically takes 30 days before the delinquency impacts your credit report. Many lenders offer a grace period, often ranging from 10 to 15 days, during which you can make a payment without incurring late fees or penalties.

This grace period provides a short window to submit your payment without immediate negative credit implications. If the payment extends beyond this grace period but before the 30-day mark, late fees will likely apply, though the late payment may not yet be reported to credit bureaus. Lenders are permitted to report a payment to credit bureaus only once it crosses the 30-day delinquency mark.

Payments that become 60, 90, or 120 days past due are also reported and reflect increasing levels of severity. Each subsequent reporting of a longer delinquency causes further damage to your credit score.

Information on Your Credit Report

Once a late car payment is reported, specific details appear on your credit report. This includes the date the payment became delinquent, the amount that was past due, and the number of days the payment was late (e.g., 30, 60, 90, or 120+ days).

Payment history holds the most weight in common credit scoring models, such as FICO and VantageScore. For example, payment history accounts for approximately 35% of a FICO Score, making it the largest factor. VantageScore also considers payment history to be “extremely influential” in its calculations.

Even a single 30-day late payment can cause a significant reduction in your credit score, particularly if you previously had a strong credit history. Derogatory marks, such as late payments, typically remain on your credit report for up to seven years from the date of the initial missed payment.

Checking Your Credit Information

Individuals can monitor their credit health and identify any reported late payments by regularly checking their credit reports. Federal law grants access to one free credit report annually from each of the three major credit bureaus: Equifax, Experian, and TransUnion. These reports can be accessed through AnnualCreditReport.com.

AnnualCreditReport.com allows weekly free access to reports from all three bureaus. When reviewing your report, carefully examine the account details for your car loan. Look for any notations indicating a late payment and verify the accuracy of the reported delinquency, including the date and severity.

If you discover inaccurate information, such as a late payment reported in error, you have the right to dispute it. You can initiate a dispute directly with the credit bureau that issued the report or with the business that furnished the incorrect information. When disputing, provide a clear written explanation of the error and include any supporting documentation.

Communicating with Your Lender

If you anticipate difficulty making a car payment or have just missed one, contacting your lender as soon as possible is advisable. Proactive communication can open avenues for potential solutions before a late payment is reported to credit bureaus, as lenders are often more willing to work with borrowers who communicate their financial challenges early.

Lenders may offer various options. These could include extending a grace period, allowing a payment deferral by moving the missed payment to the end of your loan term, or modifying your payment plan. Some lenders may also consider changing your monthly due date to better align with your income schedule.

While these options are typically at the lender’s discretion and not guaranteed, early engagement, ideally before the 30-day mark, increases the likelihood of preventing a negative mark on your credit report. If a late payment has already been accurately reported, communicating with your lender can still be beneficial for managing future payments or understanding your account status, although it is unlikely they will remove an accurately reported delinquency from your credit history.