What Happens When You Only Partially Pay Your Debt?

What Is a Partial Payment?

A partial payment is any payment you make toward a debt that falls short of the full amount due or the minimum payment required.

Example: If your credit card's minimum payment is $50 and you send in $30, that $30 would be considered a partial payment.

The same applies to loans and mortgages—if you pay less than the scheduled monthly amount, your lender may treat it as a partial payment rather than a satisfactory installment.

It's worth noting that partial payments are different from extra payments. If you make your full $200 payment and then send an additional $50 later in the month, that's considered an extra payment toward your balance, not a partial one.

Learn more: How Is a Credit Card Minimum Payment Calculated?

Can You Make Partial Payments on Your Debt?

Some lenders may allow you to make a partial payment, which can help reduce the accrued interest on your debt as well as lower the balance owed. However, creditors may still report partial payments as late or missed payments, which can remain on your credit report for seven years.

Loans and mortgages typically have set monthly payments that stay the same (unless you have an adjustable-rate mortgage). Credit cards have minimum monthly payments, which can vary depending on your balance and annual percentage rate (APR). As a rule, partial payments don't satisfy payment requirements for these types of debt. If finances are tight and you can't make full payments on your debt, the consequences can spill over.

Do Partial Payments Hurt Your Credit Score?

In many cases, yes. Payment history is the single most influential factor in your credit scores, and partial payments can be reported as late or missed payments depending on the creditor and the type of debt. Even if you send some money toward your balance, your lender may not consider the payment fulfilled until the full or minimum amount has been received.

That said, the impact on your credit depends on several factors, including how the creditor reports the payment to the credit bureaus and how far past due the account becomes.

Learn more: When Do Late Payments Get Reported?

Consequences of Partial Payments

If you find yourself in a tight spot financially and the best you can do is make partial payments, understand the implications for the various types of debt and what you can expect going forward.

Credit Cards

If you make a partial payment on your credit card balance that satisfies the minimum due, you'll avoid a late fee and penalty APR. However, you'll still incur interest charges, which can add up over time and result in costly debt. If you can't pay the minimum payment on your credit card, contact the card servicer right away—before the payment is due—and explain your circumstances.

Of course, paying off your credit card balance in full each month is best for your long-term financial well-being. If that's not possible, use a credit card calculator to see how long it will take to pay off your debt and how much interest you'll incur.

Learn more: Reasons to Pay More Than the Minimum on Your Credit Card

Mortgages

Your lender or loan servicer may consider partial payments on your mortgage as defaulting on the loan. When this happens, your loan servicer will likely send you a notice of default, and you'll incur late fees. Your credit will also take a hit.

Foreclosure on your property can't begin until at least 120 days after the first missed mortgage payment, which means you have time to make up the past-due payments before the foreclosure process starts.

Before it gets to this point, reach out to your mortgage lender and discuss ways to resolve your situation, such as mortgage modification or forbearance, to avoid losing your home. The longer you wait, the fewer options you may have, so reach out to your loan servicer right away.

Personal Loans

Lenders set the terms of personal loans. Right from the start, you have a clear plan for repayment, so any departure from the plan could have a negative effect on your credit score. This includes making only partial payments. Besides a hit to your credit, you may also incur late fees if you pay less than the full amount due.

If your payment is 30 days or more past due, it may be reported to some or all of the three credit bureaus. To maintain a healthy credit score, it's always best to make all of your monthly loan repayments on time. If you can't, contact the lender as soon as possible to work out a new plan.

Federal Student Loans

The first time you miss a payment on your federal student loans, your account is considered past due. It remains this way until you bring your account up to date or ask for deferment or forbearance.

Fortunately, if you can only make partial payments or you're struggling to stay current on your loan, the servicer may be willing to make other arrangements, but usually only if it's a part of a longer-term strategy.

If you're more than 90 days late, your loan servicer will likely report the delinquency to the major credit bureaus. If your account remains past due, it may fall into default. The timeframe for defaulting on your loans depends on the type of loan you received, but it's 270 days for most federal loans.

Defaulting has serious consequences, such as the loss of eligibility for more student aid, the unpaid balance of your loan becoming due immediately or legal action being taken by the lender.

Learn more: Options if You Can't Pay Your Student Loans

Auto Loans

Because most auto loans use your car as collateral, lenders can repossess your car for nonpayment. Although repossession laws can vary by state, your lender may start the process after you've missed several payments in a row.

If you can only make a partial payment on your auto loan, check the contract terms first to learn what the lender is authorized to do and when. If you miss a full payment by a few days or a few weeks, you will likely be charged a late fee, but this can depend on the lender and the contract terms. Auto loan lenders wait 30 days after the payment due date to report the payment as delinquent to the credit bureaus.

Before that happens, reach out to the lender and see if they are willing to work with you. They may accept partial payments until you can resume your agreed-upon loan payments.

What to Do if You Can't Afford Your Payments

If you can only make partial payments on your debt, act fast and contact your lenders as soon as possible to explain your situation. Then take these steps to avoid any consequences from not making full payments on your debt:

1. Cut unnecessary costs. The first step to getting out of debt is to cut all (or as many as possible) unnecessary expenses, like eating out, streaming services, subscriptions and more. Put the money you save toward your debt payments.
2. Create a budget that includes debt payments. Creating a budget is critical to spending within your means and keeping up with bill payments. List all your debts and monthly minimum payments. Compare that to your income, and you'll get an idea of what you can afford or need to cut out.
3. Reduce your interest rates. Three strategies that may help reduce what you pay in monthly interest are a debt consolidation loan, a balance transfer credit card or asking your lender for a lower rate.
4. Strategize debt repayment. If you have debt in collections, pay off those debts first, then use a debt payoff method such as the debt avalanche strategy or debt snowball strategy to bring down and eventually pay off your balances.
5. Contact a credit counseling organization. A nonprofit credit counselor can help you understand tactics for managing money and reducing debt, and help you come up with a debt payoff plan.

The Bottom Line

Making timely payments for the full or minimum amount due is always a good idea. Partial payments are usually considered late or missed payments, which can impact your credit—and not in a good way.

If possible, pay off bigger chunks of debt or clear your debt load completely to quickly improve your credit, and avoid the risk of partial payments altogether. As you get back on track, check your credit report and credit scores with Experian. The progress you make can be a great motivator to keep up the good work.