How Should Late Payments Be Reported, and How Long Do They Stay on a Credit Report?

Late payments are one of the most common negative items on credit reports, and they can significantly impact a consumer’s credit score and borrowing ability. Reporting late payments accurately and consistently is crucial for ensuring compliance with the Fair Credit Reporting Act (FCRA) and for maintaining the integrity of the credit reporting system.

Understanding Late Payment Reporting

A late payment occurs when a borrower fails to make the minimum payment on a credit account by the due date. Lenders typically report late payments in increments, depending on how many days past due the payment is:

30 days late
60 days late
90 days late
120+ days late (severe delinquency, possible charge-off)

Each of these increments represents a separate negative mark on a consumer’s credit report, with longer delinquencies causing greater credit score damage.

Steps for Reporting Late Payments

Do Not Report Payments as Late Until They Are 30 Days Past Due
- The FCRA prohibits lenders from reporting payments as late unless they are at least 30 days overdue.
- If a payment is one or two days late, it should not be reported as delinquent—though the lender may charge a late fee.
Report the Correct Delinquency Status
- If a payment remains unpaid, update the Payment History Profile accordingly:
  - 30 days late – Report after the full billing cycle has passed without payment.
  - 60+ days late – Reflects multiple missed due dates.
  - 90+ days late – Signals a high-risk account; credit score impact increases.
  - 120+ days late – Often leads to charge-off or collections.
Use the Date of First Delinquency (DOFD) Correctly
- The DOFD determines when the late payment record must be removed from the consumer’s credit report.
- The FCRA mandates that late payments remain on the credit report for seven years from the DOFD.
Maintain Accurate and Consistent Reporting Across CRAs
- Ensure that all updates are submitted to the major Consumer Reporting Agencies (CRAs) (Experian, Equifax, TransUnion) simultaneously to avoid discrepancies.
Use Special Comment Codes If Late Payments Were Due to Hardship
- If a borrower experienced financial hardship due to a natural disaster, job loss, or medical emergency, Special Comment Codes may provide clarity:
  - “Affected by Natural or Declared Disaster” (for disaster-related delays).
  - “Forbearance” (if payments were temporarily postponed).
- These codes do not remove the late payment, but they can provide helpful context for future lenders.

How Long Do Late Payments Stay on a Credit Report?

Late payments remain on a credit report for seven years from the DOFD.
If the consumer brings the account current, the late payment remains, but the account will show a positive status moving forward.
If the account is charged off or sent to collections, the entire tradeline (account) will be removed seven years from the DOFD.

Compliance with the FCRA

The FCRA mandates that credit reporting be:

Accurate – Report late payments only when they reach 30 days past due.
Complete – Reflect the correct delinquency level (30, 60, 90+ days) without misrepresenting the status.
Timely – Late payment records must be removed seven years from the DOFD.

Impact on the Consumer’s Credit Report

Credit Score Considerations
- A 30-day late payment can cause a significant credit score drop (especially if the consumer previously had a strong payment history).
- More severe delinquencies (90+ days late) cause greater credit damage and may lead to higher interest rates or loan denials.
Transparency for Lenders
- Properly reported late payments help lenders evaluate risk based on factual, consistent data.

Conclusion

Accurately reporting late payments is critical for FCRA compliance and fair credit reporting. By ensuring correct delinquency tracking, properly using DOFD, submitting updates to all CRAs, and applying Special Comment Codes when applicable, lenders help protect both consumer rights and the integrity of the credit reporting system.