Late Payments on Student Loans - Impact on Your Credit Score

Reader Question: "I have missed some payments on my federal student loan over the last year or so, but I eventually get caught up on them. My question is, when does a late payment hurt my credit score? Does it get reported right away?"

Legally speaking, a creditor can report a late payment to the credit bureaus at any point, once it is past due. Every company has its own reporting policies, so it varies from one creditor to another. Most credit card companies will report a late payment after 30 days. Mortgage lenders usually go a little longer than that. Student loans and lenders run the gamut from 30 days to 90 days.

The important thing is to avoid making late payments to begin with, if at all possible. I understand that life sometimes gets in the way of this, and sometimes it's a choice between eating and paying a bill. It's an unfortunate situation to be in, but it's reality for a lot of folks.

Here's some motivation for you. If you already have late payments appearing on your credit report (from the student loan company or anybody else), your credit score has already dropped. However, you can quickly turn things around by making your payments on time going forward. Take a look at this FICO scoring chart and you'll see what I mean. Payment history goes a long way toward influencing your overall credit score.

It's also important to realize that a negative entry from a late payment can follow you for a long time. According to the Fair Credit Reporting Act, these kinds of entries can remain on your reports for up to seven years. They tend to have less of an impact on your credit score over time (especially if you change your behavior for the better), but they prevent you from achieving your highest score possible.

Related Articles:

• How Credit Card Use in College Affects You Later
• How to Raise Your FICO Score Fast in 2009

I hope that answers your question. Good luck.