Maintaining a good credit rating is important. Not only does a good rating give you access to credit when you need it, but it also helps you obtain lower interest rates and fees. It can also help you get a job. Employers often check the credit rating of prospective employees before approving a hire. For these reasons, it's important to know how much time you have to pay a bill so that the creditor won't file a report with a rating agency.
The 30-Days-Late Rule
You may have heard that creditors report you to one of the three rating agencies -- Experian, TransUnion and Equifax -- only when you are 30 days or more past due. That, in fact, is the credit industry's policy, according to their own standards manual, "The Credit Reporting Resource Guide," which says, “The clock for a 30-day delinquency starts 30 days after the due date, as opposed to the billing date.” Because the due date is often as much as 20 days after the billing date, this gives you a comfortable cushion -- in theory.
The Myth of the 30-Days Rule
Unfortunately, theory and practice may differ. An article in CreditCards.com notes that some banks may report you even before you're 30 days late. Even though it's been less than 30 days, it's still an adverse report. On the other hand, Sallie Mae, the student loan lender, waits 45 days. A FICO executive notes that other creditors won't report you until you're 60 days late. FICO is the acronym for Fair Isaac Company, which makes software widely used to create credit scores. Generally, you can't predict who will report you early, who won't or how late you can be before you're reported.
Not Everyone Is Treated the Same
How quickly a lender reports you partly depends on its policies, but it also depends on you. Lauren Bowen, an attorney for Consumers Union, notes that if you generally pay your bills promptly, a company may let a single 30-days-late payment slide. If you tend to be late frequently -- even if it's usually less than 30 days -- they may report you and may not wait 30 days to do it. For these reasons, it's a good policy to pay your bills either on time or, whenever possible, within 10 days of the due date.
No One Is Perfect
One credit analyst, using FICO's credit score estimation tool, determined that how much a single late payment will hurt you depends on when you are late. If you're currently late, even a single late report will drop your FICO score 35 to 50 points. Scores in the 600s are considered below-average credit risks; scores above 700 are considered average to better-than-average. If that 35- to 50-point drops puts you below 700, it could be costly and restrict your access to credit. If the 30-days-late payment occurred in the past and you are now current, however, your FICO score will drop very slightly, and it probably won't hurt you.
I am a retired Registered Investment Advisor with 12 years experience as head of an investment management firm. I also have a Ph.D. in English and have written more than 4,000 articles for regional and national publications.