Credit Card Delinquency: What is It & How to Recover

According to a WalletHub survey, nearly 20% of those polled responded that they’re likely to miss a credit card payment or two throughout the year. With life as crazy as it is, that’s understandable.

But, does missing one credit card payment affect your credit score? It depends on how long you go before you actually make a payment. If it’s longer than 30 days, it might, and certainly, if it’s longer than two months, it will.

Being 30 days late on a credit card payment is considered delinquent. And, credit card delinquency isn’t something you’ll want to mess around with. Here’s what to know about it, how to avoid it, and what to do if you’re behind on payments.

What is Credit Card Delinquency?

Credit card delinquency is when someone falls behind on their required payments. When is it considered actually “delinquent” and not just “late?” Being 30 days late on a credit card payment is considered delinquent, but most credit card companies won’t report the account as delinquent until after two months of missed payments.

If you miss more than four or five payments, it’s likely that the credit card issuer will report the account to collections, which will hurt your credit score even more. Why does all of this matter? Aside from simply not paying what you owe, you’re actually violating the terms of your agreement with the credit card company when you don’t make the minimum payments agreed upon.

What are the Consequences of a Missed Credit Card Payment?

So, what happens if you miss a payment on your credit card? If you’ve missed the date by a week or two, chances are you won’t face severe consequences. You’ll likely just have to pay the entire balance that you owe plus the interest fees and late fees.

If you haven’t made any payments on past due accounts, your credit card will be closed after 180 days. It will then be sent to a collection agency and you will have to pay the collection agency instead of your credit card issuer.

Let’s say it doesn’t go that far, though. Does it still come with consequences? Yes! You will incur late fees, penalty APR, and risk lowering your credit score.

How Does Credit Card Delinquency Affect Your Credit Score?

Credit card delinquency affects your credit score in various ways.

While the damage depends on the other factors that go into calculating your credit score, it’s possible that your credit score can fall at least 125 points after three consecutive missed payments.

According to one FICO calculator, someone with an excellent credit score who falls behind on their payments for 90 days will see a drop in their credit score of between 113 and 133 points. The higher your credit score, the bigger the effect that credit card delinquency will have on your score.

Then, if the account goes into collections, it can count as a derogatory mark on your credit report, which will stay on there for up to seven years. Late payments of just 30 days count as “minor” derogatory marks, but an account that is in collections will count as a derogatory mark that can stay on your report for seven years from the first date of a delinquent payment.

How to Avoid Credit Card Delinquency

It’s okay if you miss a payment or two here and there because, hey, we’re only human. Life gets hectic sometimes and it’s easy to fall behind on a payment if you’re juggling ten other credit card bills, utility bills, a mortgage loan, and lots of other things to pay each month.

If that’s the reason as to why you missed a payment, consider setting up auto-pay. Most card issuers will let you set up autopay to pay at least the minimum payment due each month to avoid late payments.

If you’re less than 30 days behind on the payment, try to pay the amount due as soon as possible. If your payment is less than 30 days past due, chances are that if you pay it off ASAP, it won’t get reported.

Finding it hard to make those payments? Consider contacting your card issuer to talk about your options, such as lowering your monthly payments. Participating in consumer credit counseling also might be an option that will benefit you.

Monitor Changes in Your Credit Score

Need more of an incentive to make your payments on time? Sign up for Float, which allows you to not only see your updated credit score but also to share it with others.

Monitoring your credit score is a great way to stay on top of your finances. Having instant access to score and a breakdown of the factors affecting it gives you more control over your financial health. And, with Float, it’s even, dare we say…fun.

Is it possible to have fun while monitoring changes in your credit information? We think so. See for yourself and join Float today.

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