Imagine this: You’re a student, trying to balance school, social life, and a part-time job here and there. Everything is going well until… life happens. You miss a payment on your credit card. Or maybe it’s a student loan. Suddenly, you check your credit score and feel the shock — a major drop. Why did this happen? Can you recover?
One missed payment can be really stressful to you, particularly when you are making your way through your financial path. Still, don’t panic; you’re not the only one! With a 90-day plan, you can restore your credit score after that missed payment. And along with Blitz, you can track your score, lower your debt, and be reminded of your pending payments.
Then, how can one improve their chances of getting back on track and rebuilding their credit within 90 days? Let’s explore a step-by-step plan for score recovery after a missed payment.
How a Missed Payment Impacts Your Credit Score
Missing a payment may appear to be a little thing, yet it really threatens to trample your credit score. Your credit score acts like a financial reputation, and the impact it has from a single missed payment can be very long-lasting. Let’s explore more about it.
The Role of Payment History in Credit Scoring
Your payment history is the most significant component of your credit score. FICO and VantageScore make it their priority.
- FICO: Approximately 35% of your FICO score is derived from payment history.
- VantageScore: It accounts for about 40% of your total score.
A good payment history results in a good score. A late payment triggers a lender’s concern that you cannot repay your loans on time.
How Long Does a Missed Payment Stay on Your Credit Report?
A late payment can stay on your credit report for seven years. One such missed payment can damage your score more than you realize. Based on your credit history, a late payment can drop your score by 50 to 100 points. If your score is high, the drop can be even worse.
Here are some effects of various types of late payments
- 30-Day Late Payment: 30 days of lateness can affect your score hard, especially if you have been very punctual so far. You might only lose a few points, but the damage is usually less extensive.
- 60-Day Late Payment: At this point, your score may drop further, and lenders will notice. A 60-day late payment is harder to explain.
- 90-Day Late Payment: This is the worst case. A 90-day late payment serves as a sign of critical financial problems and can lower the score considerably. It will make it more difficult to obtain loans and credit in the future.
A late payment does not destroy your credit score forever. With a strong plan and effort, you can bounce back. Knowledge of these effects enables you to act to reduce harm and enhance your score in the future.
The 90-Day Recovery Plan for Score Improvement
Now that we understand why a missed payment hurts, how can we bounce back? The best part is that you can recover your credit score. By following the plan below, you can improve your score.
Day 1-30: Address the Missed Payment
The first 30 days are vital to restoring your credit. Here’s how to tackle that missed payment and start fixing your score.
Contact the Creditor
First, reach out to your creditor. This step is essential. Many don’t realize that creditors might offer a “goodwill adjustment.” This could lead to the removal of the late payment, especially if it’s your first mistake. A good payment history increases your chances. Read about How to Build Credit with Rent, Utilities, and Phone Plans
Here’s how to approach them:
- Be truthful: Explain your position and state that it was an error one time.
- Ask for a removal: Politely ask if they can consider removing the late payment as a gesture of goodwill.
It’s still worth an attempt even if they say no to you.
Bring the Account Current
Next, pay off the overdue balance as soon as you can. If you can, pay more than the minimum to demonstrate your devotion. The earlier you move, the faster your recovery begins. Only settling the balance won’t remove the harm, but it will prevent further detrimental marks on your report.
Set Up Payment Reminders
To avoid missing a payment in the future, set up automatic payment reminders. There are applications such as Blitz Money that can handle payments for you so that you do not miss a due date again.
Dispute Any Errors
A missed payment is not always your mistake. If it was incorrectly reported, dispute it with the credit bureaus. You can dispute it online with TransUnion, Experian, or Equifax. If they made a mistake, it may be deleted from your credit report.
Day 31-60: Rebuild Positive Credit Habits
Now that you have handled immediate issues, focus on rebuilding your credit. This stage is about forming healthy financial habits.
Make Timely Payments Going Forward
The most important thing to do is to show that you are a reliable borrower who pays on time. Impose on creditors your trustworthiness. Do not forget to set reminders, automate payments, and be consistent with the deadlines of your payments.
Keep Credit Utilization Low
Credit utilization is how much of your available credit you’re using. It’s key to your credit score. The general rule is to keep the utilization rate below 30%. So, e.g., if you have a $1,000 limit, keep your balance at $300 or less.
Consider Adding a Secured Credit Card
A secured credit card helps show you’re responsible with credit. It requires a deposit that becomes your limit. If you repeatedly make small payments, your score will be slowly re-established.
Keep Credit Inquiries to a Minimum
Every time you try to obtain credit, the creditor will perform a “hard pull” on your credit report due to which your credit score will be lowered. During recovery, avoid new credit applications unless necessary.
Day 61-90: Optimize Your Credit and Watch Your Progress
After the hard work, now it is all about polishing and tracking the progress. In these last 30 days, focus on optimizing your credit and watching your score improve.
Check Your Credit Report Regularly
As you make progress, monitor your credit report for changes. All three bureaus together in a year allow a free copy of the credit report to be obtained through AnnualCreditReport.com. Use this to check for errors and see your score improve.
Ask for a Credit Limit Increase
In case your credit is good again, you can apply for a request to increase your credit limit on the cards that you already have. This helps a lot to lower your utilization rate and improve your credit score. Just don’t increase your spending; that’s where many go wrong.
Look Into Credit Builder Loans
Credit builder loans help you rebuild your credit. They are typically small loans in which you make monthly payments. Once you’ve repaid it completely, the lenders will notify the credit bureaus, and your score will be elevated accordingly.
Long-Term Tips for Maintaining a Healthy Credit Score
Maintaining a strong credit score throughout the recovery is the key. Here are some memory aids for you:
Keep Your Credit Utilization Low
Always try to have your credit utilization below 30%. This is one of the simplest methods to have a good credit score.
Avoid Missing Payments Again
In order to keep your score in check, automate payments and reminders on all your accounts. Don’t let a missed payment occur again!
Diversify Your Credit Mix
Having different types of credit, such as credit cards, student loans, and personal loans, can help you improve your score. But be careful; only open accounts when necessary.
Keep Old Accounts Open
Your credit history length is important. Even if you don’t use some of your credit cards, keep them open. This will contribute to increasing your overall credit age, a scoring factor.
FAQs on Score Recovery After a Missed Payment
How long does it take to recover my credit score after a missed payment?
There is no standard recovery time. However, a score improvement is possible within 3 to 6 months after using the 90-day plan. Nonetheless, missed payments can be on your report for 7 years and gradually decrease your score over time.
Can I remove a missed payment from my credit report?
If the late payment was a mistake, you can also contest it with the credit reporting agencies. You can also ask your creditor for a “goodwill adjustment,” although it’s not certain that they’ll delete it.
How much will my credit score improve after following the 90-day plan?
Depending on the condition of your credit profile and the steps you have taken, your score can increase to a point of 50-100 or more. The credit recovery process will become faster if you keep the payment on time and continue decreasing the credit limit usage.
Should I apply for new credit to speed up my recovery?
It’s better not to use credit to apply for new credit while recovering. New accounts can harm your score. Rather, work on enhancing your current credit behavior, such as timely payments and balance cuts.
Can making a partial payment help my credit score if I missed a payment?
Whereas a part payment will not wipe out the default, it reduces the amount outstanding so that no additional late fee and penalty is charged. Your best course of action is to settle the entire balance as quickly as possible.
Conclusion – Patience and Consistency Are Key to Credit Recovery
It can be simple to recover from a late payment. With a good strategy and consistent action, your credit score can improve. Blitz is here to support you. From tracking payments and reminders to reviewing your credit report, Blitz makes it simple.
If you utilize the 90-day recovery plan and the Blitz tool together, you will be able to regain your score in no time. Don’t let one missed payment stop you from achieving your financial goals.
So, try Blitz today and take charge of your credit recovery journey!
