How Late Is Late?

You received your credit card bill in the mail and promptly sent in payment – or did you?  Now you begin to wonder.  A quick check of your records reveals the check has not cleared.  Is there still time to save this bad mark from hitting your credit report?  In credit score nomenclature; how late is late? 

By the way, do you speak credit score?  I do, but I must admit that I have some help.  As a matter of fact, I have the Metro 2 Manual – the other team’s playbook.  Consumer Data Industry Association describes the 2005 Credit Reporting Resource Guide (a/k/a Metro 2 Manual) in the following words:

This manual includes the new Metro II format, which provides the codes that are compliant with the most recent FCRA, industry-reporting standards and facilitates accurate reporting of credit data in a uniform manner. 

The Metro 2 Manual is complete with Metro 2 Format, Field Definitions, Exhibits, Implementation Checklist, and all else that is required for credit card companies, student loans, collection agencies, etc. to report their data to Equifax, Experian, Trans Union, and Innovis.  Yes, the Metro 2 Manual is the other team’s playbook in the sense that furnishers are “the other team” if we find them reporting inaccurate data about us to a CRA.  With this in mind, it’s nice to have the Metro 2 Manual – it keeps everything honest.    

Back to our question: How Late Is Late? 

According to Section 2-2 of the 2005 Credit Reporting Resource Guide (Metro 2 Manual) the “Industry Standard For Reporting Account Delinquency” is as follows:

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The “clock” for a 30-day delinquency starts 30 days after the due date, as opposed to the billing date.

The following example tracks an account history of four months, specifying the Metro 2 Account Status Code that should be reported.

Billing Dates                  Jan. 1       Feb.1       Mar. 1       Apr.1
Bills Received                    1               2                3                  4
Payments Past Due           0               1                2                  3
Age from Due Date           0               1                31               61
Age from Billing Date         0             30                60               90
Metro 2 Status Code        11             11               71               78

Definitions:
Metro 2 Status Code 11             0 – 29 days past due
Metro 2 Status Code 71            30 – 59 days past due
Metro 2 Status Code 78            60 – 89 days past due
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The above chart illustrates how a credit report will reflect a payment as 30 or 60 days past due based on the amount of time elapsed since due date.  This is preferred when contrasted with reporting that might otherwise be based on billing date (a much earlier date).  Nevertheless, this author recommends that whenever possible, bills be paid the same day received.  The reason for this is two-fold.  As alluded to above, paying bills early provides a cushion of time to ensure the payment is credited safely, but it also provides an additional benefit – it can increase your credit score.  If a creditor is reporting data by cycles to the CRA, then the early arrival of your payment can reduce the balance on a debt prior to cycle reporting.  Such an action will positively impact your credit utilization percentage, a primary calculation for “Amounts Owed” which represents a hefty 30% of your total FICO points. 

In closing, let’s play question and answer. 

Q: Do good things come to those who wait? 

A: Not if it involves paying bills.