“John, I was 3 weeks late on a credit card payment and about 10 days late on an auto loan payment, both 4 months ago. I was pretty sure it was going to kill my otherwise perfect credit reports and credit scores. To my surprise neither account was reported as being late. Did I get lucky or what?”
This is a pretty common scenario when debtors either forget to make their payments by the due date or consciously neglect to make payments by the due date.
In either scenario, even one day past the due date is considered as being “past due.”
At this point the creditor can levy a late fee, apply interest to the unpaid amount, and take more punitive actions toward the debtor.
In fact, at this point a credit card issuer can increase the interest rate, suspend the credit line, or close the account altogether.
As long as they send you a notice 45 days in advance of any adverse change to the account, they can shut you off.
Still, while all of these actions are pretty nasty and fairly common they are not “credit reporting” related.
The credit industry standards for reporting late payments to the credit reporting agencies is that the payment must be a full 30 days past the due date, or one full cycle past due.
The Standards for Late Payment Reporting
So, in the reader’s question above she was not “lucky” but was treated exactly how millions of other consumers, who are late but not 30 days late, are treated.
The standard for late payment credit reporting isn’t “one to 30 days late” as some may think.
In fact, the credit industry standards manual (The Credit Reporting Resource Guide) states, “The clock for a 30-day delinquency starts 30 days after the due date, as opposed to the billing date.”
This gives you a pretty generous grace period before negative information is sent to the credit bureaus.
Think about it…the CARD Act requires that your credit card due date has to be at least 21 days from the day the statement is sent.
So, that’s 21 days plus 30 days before any late payments are reported to the credit bureaus…or 51 days.
Point being, if you end up with a late payment on a credit card account then you probably deserved it.
Calculating Grace Periods
Auto loan due dates are set in advance and stay roughly the same every month for the term of your loan. Mortgage due dates are pretty standardized. The payment is due on the 1st of the month and past due after the 16th.
Now that you know that you can add 30 days to each of the due dates to figure out your credit reporting grace period.
If you do end up with a 30-day late payment on your credit report, then be aware that you will not get another grace period before a 60-day late payment is reported — you’ve already used your grace period at 30 days.
So, 30 days after the first late payment is reported (and if you have not made your payment and caught up) a second late payment will be reported and it will be of the “60 days past due” variety.
Of course if you are able to make your payment and cure your account, then you restart the clock at zero days.
Just because you missed a payment that doesn’t mean the lender or credit card issuer are now allowed to ignore the industry requirement that an account be 30 days past the due date in order to show someone as being delinquent.
John Ulzheimer is the Credit Expert at CreditSesame.com, and a credit blogger at SmartCredit.com, Mint.com, and the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. You can follow John on Twitter here.