What Happens if I Miss a Loan Payment?

When you take out a loan, you sign up to make payments on it every month. But sometimes, life happens. You might forget because you’re sick, busy, or dealing with a crisis. Or maybe money is tight and you just couldn't come up with the funds to make your payment on schedule.

Missing a loan payment isn't ideal, but the consequences might not be too severe depending on how soon you catch up. You can often minimize the harm if you fix the problem quickly. Here’s what happens if you miss a loan payment—and what you can do to avoid that in the future.

What's Considered a Missed Payment?

The most important factor in late payments is how late it is. A payment is considered late if it’s made after its due date—even by a day or two—but before the end of the billing cycle. A payment is usually considered missed if it isn't made during an entire billing cycle (usually 30 days). 

The distinction is important: Lenders generally don't report a payment as missed to the credit bureaus unless it’s 30 or more days late.

So let's say your loan payment is due on the first of the month, but you forget to pay it. If you make your payment by the 10th or 15th of the month, you should avoid having that payment reported as missed or delinquent to the credit bureaus. And that could help you avoid credit score damage. 

However, if your loan payment is due on the first of the month and it isn't made by the first of the following month, that payment is missed. Your lender may report that to the credit bureaus as missed or delinquent. 

What Happens if You Miss a Loan Payment?

If you miss a loan payment—as opposed to just being late— a few different things might happen.

You could face credit score damage

Missed payments are generally reported to the credit bureaus. Since your payment history carries a lot of weight in calculating your credit score, that number could drop substantially once you have a missed payment on your record. Missed payments can stay on your credit report for up to seven years. 

You could be charged late fees and penalties

Even a late payment could lead to late fees and penalties, but you might get those waived if it's  your first mistake. If you completely miss a loan payment, however, you're a lot more likely to get hit with late fees and other costly penalties. The terms of your loan should outline your lender’s policies regarding missed payments.

Can You Fix a Missed Payment?

It's often possible to fix a missed payment and avoid unwanted consequences. The key is to make your payment as soon as you can. Then, call your lender and explain the situation. If you incurred a late fee or penalty for your missed payment but have a long history of paying on time, your lender may waive the fee—especially if you've made your payment already. 

If you need a little more time to fix your missed payment, communicate that to your lender right away, and ask for some leeway. They may agree not to report your missed payment to the credit bureaus. That’s more likely if it's your first time skipping a payment, and if you can make the payment within a reasonable time frame.

How to Avoid Missing Loan Payments

Missed loan payments could cause credit score damage and cost you penalties and fees. So, it's best to avoid that situation whenever possible. Here are a few ways to avoid missed payments.

Set up automatic payments

We're all human, and when life gets busy, it's easy to forget to pay a bill. Even if you set up calendar alerts reminding you to pay, you might dismiss an alert on a busy day and forget all about it. 

That's why it’s worth it to set up automatic payments. If your loan amount is fixed, arrange to have that sum debited from your checking account by the due date each month. That way, you don't have to think about manually making the payments.

Build an emergency fund

Sometimes, missed payments stem from forgetfulness. Other times, they stem from running out of money. Keep some money on hand in an emergency fund if at all possible. That way, if your paycheck runs out on you early, you may still make your loan payments on time.

Contact your lender if you're in a hardship situation

It may be that you're recovering from an injury and are out of work, or you've lost your job and money is tight. If you're experiencing financial hardship, reach out to your lender before you find yourself missing a payment. Your lender may let you pause your payments until you're back on your feet.

The Bottom Line on Missing a Loan Payment

It's natural to get nervous if you've missed a loan payment, but if you make that missed payment right away, you might avoid both late fees and credit score damage.

If you're struggling to keep up with your debts and are missing payments frequently, it may be a sign that you need to seek help. It may be a good idea to talk to a debt relief company that can walk you through your options for getting rid of your unaffordable debt.