does late payments affect credit scores?
October 7, 2012 10:41 AM   Subscribe

I made several payments to my credit card but it wasn't the full amount and it appears I got charged interest for the stuff I forgot to pay - does this affect my credit score?

Long story short - I couldn't get online banking for my credit card so I took to paying for every charge I put on it right away (which was easy cause it's only for one website) because for some reason, my statements kept arriving late.

Anyway, my sister used my card, so I miscalculated and left a carryover balance of 134 that's been carrying over for one month now. I finally got my statement today so I paid it all, but I already have an interest charge on there for the stuff I forgot.

Is this bad for my credit? I don't really know how credit cards work, so forgive me if this seems like a dumb question. This is a new credit card so I don't have much history with it but I've always paid my other credit cards on time.
posted by cyml to Work & Money (9 answers total)
If you do that all the time, it'll be bad for your credit. Once? Basically irrelevant. I've actually done that kind of thing twice (miscalculated or made a mistake and left a modest balance) and it isn't even listed on my credit report.
posted by Tomorrowful at 10:43 AM on October 7, 2012

leaving a balance does not impact score. late payments do, but most people carry a balance.
posted by dejah420 at 10:46 AM on October 7, 2012 [10 favorites]

As long as you made the minimum payment on time, you should be just fine. For such a small balance, the minimum payment would probably be something like $15 or $30, so I'm assuming you did.

Carrying over a balance and paying interest is kind of the point of credit cards -- obviously it's not financially responsible to do so, but that's why credit cards exist. So people can pay for things slowly that they can't afford this month -- and credit card companies can earn interest by financing their slow payments.

In leaving a balance over your minimum payment, you're basically using the card the way most people do it. So don't worry at all. Just pay off the extra balance now, you're doing fine.
posted by crackingdes at 10:49 AM on October 7, 2012 [3 favorites]

Yeah, as long as you pay the minimum balance within the allowed time, you shouldn't have a problem. The main thing that adversely affects your score is late payments.

Another thing I've noticed as apparently being bad (and which is horrendously stupid and annoying IMAO) is spending over 50% of your credit limit in one month. Even if you pay off your entire balance in full every single month, on time and in a single payment, you will still be penalized for using too much of your available credit.

hulk smash
posted by elizardbits at 11:24 AM on October 7, 2012

cyml: "Is this bad for my credit? I don't really know how credit cards work, so forgive me if this seems like a dumb question."

There's several inputs to a credit score. The one you're principally concerned about is late payments. In credit parlance, this is "paying as agreed". You agreed to make a minimum payment. It sounds like you've been making that minimum payment* so you are in fact paying as agreed. Also note that the earliest agencies record is 30 days past due.

But the question is about credit scores in general, and there are indeed other factors. Available credit ratios factor into your credit score as well, so carrying a balance will hurt your credit score very slightly for the duration the balance exists. I'd be more concerned about the interest you were charged than divet in your score, as it should recover when the lender reports a zero dollar balance.

*You don't need to pay off every charge immediately, and at least my card penalizes more than two payment transactions a month. There's no logical reason to structure your payments the way you do. The best plan is to pay in full on the due date.
posted by pwnguin at 11:33 AM on October 7, 2012

I have had more than one (well, two actually) credit card companies cancel me because they never made any money off me. I paid the balance electronically the day the statement posted to my account and never accrued a penny of interest. These cards had no annual fees, so I guess they had a point. And yeah, they got really testy when more than one payment was made in the billing cycle.

With the remaining two that I have, I try to let them earn interest on $100 once or twice a year, but that's it.
posted by halfbuckaroo at 11:47 AM on October 7, 2012 [1 favorite]

Are you in the UK? If so, you are entitled to get a copy of your credit report. The simplest way to do this is to go to the website of one of the big credit scoring companies (Experian or Equifax) and click on the link to the "£2 statutory credit report" -- the Equifax page is here and the Experian page is here. (Watch out, as both websites offer more expensive subscription services which have an initial free-trial period after which you have to pay. I guess you could get a free credit report by signing up for one of these and then cancelling it within the trial period, but it's still worth noting that these services are different from the companies' statutory obligation to provide you with a copy of your credit report for a one-off charge of £2). Checking your credit report is a good idea if you have any concerns about your credit rating. (Apologies - I don't know what the deal is outside the UK).
posted by meronym at 11:58 AM on October 7, 2012 [1 favorite]

I have had more than one (well, two actually) credit card companies cancel me because they never made any money off me. I paid the balance electronically the day the statement posted to my account and never accrued a penny of interest.

The only way credit card companies don't make any money off of you is if you don't use the card. They get their money both coming and going: they charge the customer interest when they carry a balance and they charge the merchant a percentage of every transaction, usually less than 3% with a minimum of some handful of cents per transaction. Ever wonder how they can afford to give you that grace period when you don't carry a balance? That's free money that they're giving to you for a while at the expense of the opportunity to invest it in some other way during that time. Time value of money and all. Ever wonder how they can afford loyalty programs like cashback and airline miles, even to people who pay off the balance every month? It's because they're getting a percentage on the dollar amount of every transaction made through the card.

As for OP's question, as long as you paid the minimum payment, you're golden. The minimum payment depends on your balance and is printed somewhere on your statement every month. (If you have a larger balance, the minimum will be larger.) It's actually in the credit card company's interest for you to pay no more than the minimum and roll over the rest of the debt every month. It takes a long time to pay off the principal if you do this and you accrue a lot of interest in the meantime.
posted by Nioate at 3:08 PM on October 7, 2012

Agreeing with everyone else that it sounds like you didn't actually make a "late" payment. You likely just payed less than the full payment, and you got charged interest on the balance which is technically how credit cards are supposed to work. So no, it won't affect your credit, as long as you continue to pay at least the minimum payment on the card every month, although ideally you should try to pay off the entire balance every month.

If your statements are arriving late, you should call the customer service number for your credit card and ask them to remedy that situation. But most credit card companies now have a website where you can check your statement online. I know you said that you "couldn't get online banking for my credit card" and I'm not too sure what you mean by that. Does that mean you can't pay your credit card bill online or your bank won't let you pay your credit card bill online? At any rate, even if you can't pay your bill online, you should still be able to view your statement online so that you'll know what the balance is, the minimum payment due, and the due date.
posted by katyggls at 5:36 PM on October 7, 2012

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