You Missed a Loan Payment. Here Is What Happens Next.

The usual timeline after a missed payment

Late payments don't all count equally. A payment that's 10 days late and then made usually never appears on your credit report. The 30-day line is what matters for reporting, which is why catching up within that first month is worth almost any effort.

A grace period is not the same as a free pass. It only delays the late fee; the payment is still late for the purpose of your contract, and on many installment loans interest keeps building on the unpaid balance every day. Check the "late charges" section of your loan agreement or the most recent statement to see the exact grace period and fee that apply to you.

What it does to your credit

Credit bureaus generally see a late payment only once it is a full 30 days past due. After that, the late mark can be reported for seven years, and the longer an account stays behind, the more serious the mark: 60 or 90 days late hurts more than 30. Paying the balance later doesn't erase an accurate late mark, but the effect on your score fades as the mark ages and new on-time payments pile up.

If the account goes to collection or is charged off, the federal Fair Credit Reporting Act starts the seven-year reporting clock 180 days after the delinquency began, so it can't be restarted by a later sale to a new collector. Funditia covers how credit reports work and what to do if a late mark is reported in error.

Car loans, mortgages and unsecured loans

Because the consequences differ, pay secured debts you need to keep, like your home and car, before unsecured ones when money is short. Missing a credit card payment is serious; losing the car you drive to work is worse.

What to do in the first 30 days

1. 1 Pay what you can, as soon as you can. If you can catch up before the payment is 30 days late, it usually won't reach your credit report.
2. 2 Call the lender before the next due date. Ask about a due-date change, a one- or two-month payment extension, or a short repayment plan. Lenders often prefer working with you to repossessing or collecting.
3. 3 Ask what each option really costs. Interest usually keeps accruing during an extension, which can raise the total you pay.
4. 4 Get any agreement in writing, with the representative's name, the date and any case number.
5. 5 Ask whether the late fee can be waived, especially if you've paid on time before. The answer may be no, but it costs nothing to ask.

Deciding what to pay first

When you can't cover every bill this month, pay in order of consequences, not in order of who calls most often. A collector's pressure doesn't change what's at stake.

• Keep a roof and the basics: rent or mortgage, utilities, food and any medicine come first.
• Protect what you need to earn: the car loan, if you drive to work, and the insurance on that car.
• Then court-ordered and tax debts, such as child support, which carry their own enforcement tools.
• Then unsecured debts: credit cards, personal loans and medical bills. Missing these hurts your credit and can lead to collection, but a private creditor generally needs a court judgment before it can garnish your wages.

Tell each unsecured lender what you can pay and when. A partial payment won't stop a late mark at 30 days, but a written plan the lender has agreed to can keep the account from going to collection.

If you can't catch up soon

If the problem is a lost job, an illness or a cut in income, a one-time fix won't hold. Ask the lender about a formal hardship program, forbearance or a loan modification; our guide to hardship plans, forbearance and deferment explains how each works and what it costs. For a mortgage, a HUD-approved housing counseling agency can help for free.

If several debts are behind, a nonprofit credit counselor can review your whole budget. And if an account is already with a collector, you have specific federal rights; see debt collectors and your rights before you agree to anything.

Common questions