If you wanted to split what you are trying to say into two sentences, then the first sentence would be more appropriate "I missed the bus. This happened because I woke up late." However, it would sound more natural to just combine both sentences and say "I missed the bus because I woke up late." P.S. "I changed it from later --> late because "later" is not correctly used in this sentence; late would be better"

"This" (or "that") is used for emphasising, often when something new is going to be said. In your text you added a new bit of information (why it happened), so "this" is better. For example: Yesterday I had to walk to work in the rain. It made me soaking wet. ["it" is referring back to "the rain"] Yesterday I had to walk to work in the rain. This is why I arrived soaking wet. [emphasising the rain] So in your text, using "it" would be better if you said something about the bus: I missed the bus. It left before I got to the bus stop. [but better to join with "because" because the first sentence is so short]

it - a thing this - a situation