If you make a late payment to a creditor or lender that is more that 30 days past due, your creditor will report the late payment to the credit bureaus. This is a derogatory entry on your credit file that will have a negative effect on your score for years to come.
The payment history on your accounts is the single greatest factor used by the credit bureaus in determining your credit score. Payments account for 35 per cent of the scoring formula, and one late payment can result in a significant loss of points.
Late payments, like many other derogatory items in your credit file, will remain on your report for seven years before being removed.
Multiple late payment notations will not only lower your credit score, they will make you appear irresponsible with managing debt. They can interfere with your approval for loans, credit cards, housing and certain types of employment for the duration of time that they appear within your credit history.
A late payment entry is not irrevocable. Many individuals have had success petitioning their creditors to remove the negative information by citing a previous good payment history and resolving to make all payments on time in the future.
If a late payment appears on your report that you know is inaccurate, you have the right to dispute your reported payment history with the credit bureaus and ask that an investigation be conducted. Disputes are most effective when you have documentation, such as a cancelled check, to prove that the payment was reported late in error.