Does Making Late Credit Card Payments Ruin Your Credit Score?

Banks and credit card companies notify the major credit reporting bureaus each time a debtor misses a payment on a credit card. Missing credit card payments may not ruin a credit score outright, but will make it difficult to maintain a high score. Credit scores range from 300 to 850, and scores 720 or higher are considered superb. At that level people rarely miss a credit card payment or pay late. This helps them qualify for easy approval on most loans along with the lowest rates.

Considerations

People who are near the bottom end of the credit scoring scale tend to miss payments on credit cards and other loans. In addition to hurting credit, missing credit card payments hurts in other ways. The bank or card company usually adds an expensive late fee, and in some situations missing a payment could result in an increase in the interest rate--up to 35 percent, according to finance portal Bills.com. Late fees range from $15 to $50, with card companies charging the fee for each missed payment.

Effects

Multiple delinquencies can ruin credit scores. Some people battling financial problems may miss two or three credit card payments in a row. This leads to the debtor's credit report showing delinquencies of 30 days, 60 days, 90 days or even more. Each delinquency hurts credit ratings, and is a tip off to other creditors that the debtor is struggling with his finances.

Scores

It's impossible for anyone to say exactly how late credit card payments will affect a person's score or how many late payments are necessary to ruin credit. The FICO computer scoring model for credit scores does not feature pre-determined penalties. For example, credit scores are not automatically docked, say, one point for each missed credit card payment. Damage to scores depends on a person's specific credit profile, and there is no guarantee a score will drop after just one missed payment. People with high credit scores have the most to lose if they miss a credit card payment. CNN reports that someone with a credit score in the low 800s could lose 100 points off a credit score by missing a single credit card payment. People with low credit scores already have bad credit, meaning they can't do much more to ruin their credit or cause their score to drop.

Solutions

People who anticipate missing credit card payments should contact their bank or card company. The company may offer special hardship plans that could reduce--or even suspend--payments temporarily while the debtor works through a hardship such as a job loss or illness.