Deferring a car payment will likely lower your credit score, but the damage depends on how your lender reports it

When you defer a car payment, your lender may report the missed payment to the credit bureaus as a late payment or deferred account. This appears on your credit report and causes your score to drop. The size of the drop varies: some lenders report a deferral as a 30-day late payment immediately, while others hold off reporting until you've missed two or more payments in a row. A few lenders don't report deferrals to the bureaus at all, though this is rare.

The damage to your score is real but not permanent. A single late payment typically costs 100 to 150 points on a 300–850 scale, though the exact hit depends on your starting score and credit history. If you have excellent credit, the drop is often larger in percentage terms. If you already have late payments or collections on your report, a deferral may do less additional damage because your score is already lower.

The key variable is what happens after you defer. If you resume payments on time and the deferral is reported as a one-time event, your score will recover over 12 to 24 months. If the deferral leads to a missed payment that stays unpaid, the damage compounds and lasts much longer.

Key Takeaways

  • A deferred payment is usually reported to credit bureaus as a late payment, which lowers your score by 100 to 150 points depending on your current credit profile.
  • Some lenders report deferrals immediately; others wait until you've missed two or more payments before reporting to the bureaus.
  • Your credit score will begin to recover within 12 to 24 months if you resume on-time payments after the deferral ends.
  • The impact on your ability to borrow is immediate: lenders may raise your interest rate or deny new credit applications while the late payment is recent.
  • Asking your lender about deferral options before you miss a payment gives you the best chance of minimizing credit damage.

How lenders report deferrals to credit bureaus

Not all lenders handle deferrals the same way. Some treat a deferral as a formal forbearance and report it separately from a late payment. Others simply skip reporting until you've actually missed a payment. A third group reports the deferred month as a 30-day late payment the moment you defer, even though you haven't technically missed the deadline yet.

Before you agree to defer, ask your lender directly: "Will this deferral be reported to the credit bureaus, and if so, how?" Get the answer in writing if possible. Some lenders will tell you they won't report a single deferred payment if you catch up within 30 days. Others will report it no matter what. Knowing this in advance lets you decide whether deferring is worth the credit hit.

The three major credit bureaus—Equifax, Experian, and TransUnion—receive reports from lenders monthly. If your lender reports a deferral or late payment, it will show up on your credit report within 30 to 45 days. You can check your report for free once per year at AnnualCreditReport.com, which is the official site run by the three bureaus.

When the credit damage is worst

A deferral hurts your credit most if it turns into a missed payment. If you defer one month and pay the next month on time, the damage is limited. If you defer and then miss the payment that comes due after the deferral period ends, the lender will report both the deferral and the missed payment, and your score will drop further.

The timing also matters. If you defer early in your loan—when you have a clean payment history—the damage is often less severe than if you defer after already having late payments on your record. Lenders and credit scoring models treat a first late payment differently from a third one.

Deferrals also hurt more if you're applying for new credit soon. A mortgage lender, credit card issuer, or auto lender will see the recent late payment and may deny your application or offer you a much higher interest rate. This effect is strongest in the first 30 days after the late payment is reported and gradually weakens over time.

How long a deferral stays on your credit report

A late payment or deferral reported to the credit bureaus will remain on your report for seven years from the date you first missed the payment. This doesn't mean your score stays damaged for seven years—it recovers much faster—but the record itself is visible to lenders for the full seven-year period.

After about 12 months of on-time payments following the deferral, most credit scoring models weight the late payment less heavily. After 24 months, the impact on your score is usually minimal, even though the record is still there. After seven years, the late payment falls off your report entirely and no longer affects your score at all.

If you're planning to apply for a mortgage or another major loan, try to defer only if you can resume payments immediately after. The closer you are to applying for credit, the more a recent deferral will hurt your chances.

Deferral versus forbearance: what credit bureaus see

A deferral typically means you skip one or more payments and add them to the end of your loan. A forbearance means your lender temporarily reduces or pauses your payment, usually for a set period like three to six months. Both can appear on your credit report, but they're sometimes treated differently.

Some lenders report forbearance as a separate status code that doesn't count as a late payment. Others report it the same way they report a deferral. The difference matters: a forbearance code may do less damage to your score than a 30-day late payment code. Again, ask your lender which code they'll use before you agree to either option.

If your lender offers forbearance instead of deferral, it's worth asking which option has less impact on your credit report. Forbearance sometimes comes with a lower credit hit, though not always. The only way to know is to ask.

What to do if you're considering a deferral

Before you defer, contact your lender and ask about all available options. Some lenders offer payment reductions, loan extensions, or temporary interest rate cuts that don't require you to miss a payment at all. These options may not damage your credit. Others offer deferrals that are reported differently depending on how quickly you catch up.

If deferring is your only option, ask these questions: Will this be reported as a late payment? If I catch up within 30 days, will you still report it? How many months can I defer? Will the deferred payments be added to the end of the loan or rolled into future payments? Get the answers in writing.

If you know you can't afford the deferred payments when they come due, don't defer. A deferral that leads to a missed payment is worse than a single missed payment. Instead, explore whether your lender will modify the loan itself—extending the term, lowering the rate, or reducing the monthly payment permanently.

How to rebuild credit after a deferral

The fastest way to recover from a deferral is to make every payment on time from that point forward. Set up automatic payments if you can, so you don't risk another late payment by accident. Each on-time payment after the deferral strengthens your credit profile and gradually reduces the weight of the late payment.

If you have other debts, paying those on time also helps. Credit scoring models look at your entire payment history, not just your car loan. Paying down credit card balances can also boost your score, because it lowers your credit utilization ratio—the amount of available credit you're using.

Don't close old credit accounts or apply for multiple new credit cards while you're rebuilding. Both actions can temporarily lower your score further. Focus on on-time payments and letting time pass. After 12 to 24 months of clean payment history, your score will be substantially higher.

Frequently Asked Questions

Will deferring hurt my credit more than missing a payment?

Deferring is often reported the same way as missing a payment, so the initial credit damage is similar. The difference is that deferring is an agreement with your lender, whereas missing a payment is a default. If you defer and then catch up, you've avoided the compounding damage of multiple missed payments. If you defer and then miss the catch-up payment, you're worse off than if you'd just missed the original payment.

Can I defer without my lender reporting it to the credit bureaus?

Some lenders will not report a single deferred payment if you catch up within 30 days, but this is not may provide. Always ask your lender in advance whether they report deferrals. If they say they will report it, you can't avoid the credit hit by deferring—the damage happens whether you like it or not.

How much will my credit score drop if I defer?

A typical drop is 100 to 150 points, but it depends on your current score and history. If you have excellent credit, the drop may be larger in percentage terms. If you already have late payments on your report, the additional damage from a deferral may be smaller. The only way to know for sure is to check your score before and after the deferral is reported.

Can I get a car loan or mortgage while I have a recent deferral on my credit report?

It's possible but difficult. Most lenders will see the recent late payment and either deny your application or offer a much higher interest rate. Waiting 12 to 24 months after the deferral before applying for new credit gives you a much better chance of approval at a reasonable rate.

Does deferring a payment mean I don't have to pay it back?

No. Deferring means you delay the payment, not cancel it. The deferred amount is usually added to the end of your loan or rolled into future payments. You will pay it eventually, often with interest. If you can't afford the payment now, deferring only postpones the problem unless your financial situation improves.