Short answer: a missed payment can cost a late fee set by your loan contract, and if it stays unpaid it can show up on your credit reports, where late payments are counted as 30, 60 and 90 days late (CFPB). Most negative information can be reported for seven years (CFPB). The sooner you pay or contact the lender, the fewer of these steps you reach.
What can happen, step by step
| When | What can happen | Where the rule comes from |
|---|---|---|
| After the due date | A late fee, if your contract has one. Some contracts allow a few days of grace before the fee applies. | Your loan disclosure must state any dollar or percentage charge for a late payment (12 CFR 1026.18(l)). The contract sets any grace period. |
| About a month late | The lender may report the payment as late to the credit bureaus. Credit reports show the number of payments 30, 60 and 90 days late. | CFPB credit report guide. A lender that reports negative information must notify you in writing before, or no later than 30 days after, it first does so (15 U.S.C. 1681s-2(a)(7)). |
| Months late | The lender may treat the loan as in default under the contract, charge it off or send it to collections. | The contract defines default; read it for what triggers it. |
| If a debt collector contacts you | The collector must give you validation information about the debt. You then have a 30 day validation period to dispute it in writing. | 12 CFR 1006.34 |
| Afterwards | Late payments and collections can generally stay on your credit report for up to seven years. | CFPB, 15 U.S.C. 1681c |
What to do now
- Pay the missed amount as soon as you can, even if a late fee has already been charged.
- Call the lender, ideally before the next due date. Ask whether it has any hardship options, such as a changed due date or a payment plan, and get any agreement in writing.
- Check your credit reports. You can get them free every week (FTC). If a late payment is reported by mistake, dispute it with the credit bureau and the lender (FTC).
- If a debt collector contacts you and you do not recognize the debt or the amount, dispute it in writing within the validation period (12 CFR 1006.34).
- If you think the lender or collector broke the rules, you can file a complaint. See how to file a loan complaint.
Taking a high cost short term loan to make the payment can make the problem bigger. If you already have a payday loan you cannot repay, see what to do if you can't repay a payday loan. For lower cost options, see payday alternative loans from credit unions.
Before your next loan
- Read the late payment line in the disclosure and the default section of the contract before you sign.
- Set up a reminder or an automatic payment for a date when you know the money is in your account.
- Pick a payment you can make every month. Our debt-to-income guide shows how much of your income your debts already take.
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Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.
Sources
- Regulation Z, 12 CFR 1026.18: content of closed-end disclosures
- CFPB: Understand your credit report (handout, PDF)
- 15 U.S.C. 1681s-2(a)(7): notice of negative information furnished to a credit bureau
- Regulation F, 12 CFR 1006.34: debt validation notice and validation period
- CFPB: How long does information stay on my credit report?
- 15 U.S.C. 1681c: information excluded from consumer reports (seven year limit)
- FTC: You now have permanent access to free weekly credit reports (October 2023)
- FTC: Disputing Errors on Your Credit Reports