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In the business of everyday life, it’s easy to forget to pay a bill for a few weeks. But that small mistake may have some major financial consequences, especially when it comes to your credit. Late payments can cause your credit scores to drop and can stay on your credit reports for years. Having a delinquency on your credit report can make it harder to qualify for a loan, rent an apartment and even land a job, so staying on top of your monthly bills is a pretty important part of maintaining your financial health.

What is a credit report?

A credit report is a summary of all your credit activity. It includes information about your existing loans and credit cards, such as how much money you owe and whether you’ve made your payments on time. If you filed for bankruptcy within the past few years, that will also be reflected in your report.

Many lenders and credit card issuers look at your credit reports to decide if they want to work with you. When you apply for loans, for example, lenders will pull your reports to determine your creditworthiness. If you have a positive credit history, you’re more likely to get approved for loans with good rates and terms.

Landlords, insurance companies, utility companies and even potential employers may also check your reports. Because your credit can have an impact on everything from your employment prospects to your housing situation, it’s important to pay your bills on time and keep your credit scores up.

How payment history affects credit overall

If you’re more than 30 days late with a credit card or loan payment, your account may be reported as delinquent to credit bureaus like Equifax, TransUnion and Experian. Credit bureaus gather information about your payment history and outstanding debt from creditors and use it to put together your credit reports. Creditors aren’t required to report late payments to credit bureaus, but many do. So if you don’t pay your bills on time, it will probably show up on your credit reports and hurt your credit scores.

Payment history is the most important factor in determining your credit scores. It makes up 35% of your FICO score, so missing a payment can cause your credit rating to drop substantially. How many points you’ll lose depends on how many payments you’ve missed and how late they were. It’s estimated that someone with a very good score could lose as many as 110 points, and someone with a good score could see an 80-point drop.

On average, it takes two years to rebuild your credit and get it back to where it was before. That’s why it’s important to do everything you can to prevent late payments, especially if you’re planning on taking out loans in the near future.

The shelf-life of late payments on a credit report

Your credit scores will likely recover after two years if you get your finances back on track and pay your bills on time. But delinquencies may show up on your credit reports for years after your score has bounced back, making it more difficult to qualify for loans.

Credit bureaus are allowed to report negative information like late payments and bankruptcy for up to seven years. Even after seven years have passed, they can include the delinquency in your credit reports under certain circumstances.

If you’re trying to take out more than $150,000 of credit, for example, late payments can still appear on your credit reports. Negative marks may also show up if you’re applying for a job that pays more than $75,000 and your potential employer opts to runs a credit check. Outside of these two situations, your late payments will fall off your credit reports after seven years, allowing you to have a fresh start.

Still, seven years is a long time to wait for your credit to improve. It’s better to avoid late payments in the first place so you never have to deal with the consequences of damaging your credit.

Tips to avoid late credit card payments

Having negative marks on your credit reports can make it more difficult to qualify for loans, apartments, affordable insurance and more. Here are some tips to help you avoid late payments so delinquencies never make it onto your reports.

  • Set up automatic payments. When you’re busy, it’s easy to forget to pay your bills. Setting up automatic payments enables you to pay your bills on time without having to think about it.
  • Set up reminders. If you’re worried that you’ll overdraft your account by using autopay, then you may want to set up electronic alerts instead. Many banks will send you a text or an email to let you know when a bill is due. Budgeting apps like Mint will also send you notifications when it’s time to pay your bills so you don’t forget and miss the deadline.
  • Customize due dates. Many companies allow you to change the due dates of your loan,credit card and utility payments to better suit your financial situation. If you have trouble managing your money, you may want to set up automatic payments to come out of your account a few days after you get paid. That way you’ll never miss a payment because of overspending.
  • Build your savings. If an unexpected expense comes up, it can be hard to cover all your regular monthly bills, especially if you don’t have savings. An emergency fund will give you a financial buffer and make it easier to pay your bills no matter what life throws your way.

Late payments can show up on your credit reports for years and affect your ability to qualify for loans, apartments and jobs. But if you’ve missed a few payments, don’t panic. You can minimize the damage to your credit scores by paying your bills on time and keeping your credit utilization ratio low. As long as you work on improving your finances, your credit scores will bounce back, and your late payments will eventually become a footnote in your credit history.