How to recover from credit card delinquency
The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for . The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.
Many of us have accidentally missed a credit card payment, or paid our credit card bill a few days late because we were waiting on a paycheck to come through. This type of credit card delinquency is easy to resolve and might not even affect your credit score — but if you let your credit card bills go unpaid for months, you run the risk of developing the kind of credit card delinquency that could significantly damage your credit.
While it’s relatively easy to recover from a minor credit card delinquency, there is a high cost to ignoring your credit card bills over an extended period of time. Your credit account could be closed and charged off, your debt could be sent to collections and your wages could be garnished. Plus, you’ll end up with a derogatory mark on your credit report that might stick around for seven years.
What is credit card delinquency?
If your credit card payment is overdue, your account is considered delinquent. Most credit card companies do not report a delinquent credit account to the credit bureaus until your payment is over 30 days late — so if you catch your delinquent credit card bill in time and make a payment, your overdue bill won’t have a negative effect on your credit score.
If your credit account remains delinquent for 60 days, not only will your credit score be affected but your credit card issuer may also raise your interest to the penalty APR rate.
If your account remains delinquent for 90 days or more, your lender may decide to close your credit card account and send your debt to collections. Your account may also be charged off, which would appear as a derogatory mark on your credit report that severely damages your credit score.
How can I check if my credit card bill is delinquent?
If you want to know whether your credit card bill is delinquent, log into your online account or call the customer service number on the back of your credit card. You’ll be able to check your payment history and confirm whether or not you have any overdue bills. Your lender will also contact you — by mail, email, text or mobile alert — when you are late on a payment, so you may already have received notification of a potential credit card delinquency.
If you discover that your credit card bill is delinquent, make a payment as quickly as possible. If this is your first delinquency and you are less than 30 days late, you may even be able to contact your credit card issuer and get your late fee removed.
Does delinquency hurt my credit score?
Credit card delinquency can hurt your credit score. If you make your credit card payment while your account is less than 30 days delinquent, it is unlikely that your credit score will be affected. However, letting your account go more than 30 days delinquent will hurt your credit score.
Will paying off collections recover my credit score?
If your debt has been sent to a collections agency, paying it off may help your credit score, depending on which scoring model is being used. Newer scoring models like FICO 9 ignore paid off collections, but older formulas such as FICO 8 do not. In the latter case, your score may still remain low for a long period of time after you pay it off.
How do I pay off serious delinquency?
- Start making payments immediately. If your credit account has been delinquent for more than 30 days, you need to prioritize making payments as quickly as possible. Many people have trouble paying off credit card debt, especially when it has started to spiral out of control — but the sooner you can start making payments, the sooner you’ll get out of delinquency and back on track.
- Contact your credit card issuer. Many lenders have hardship programs designed to assist consumers who are experiencing financial difficulties. You may be able to get your monthly payment reduced, for example, or you may request a credit card forbearance plan that will allow you to postpone payments for a period of time.
- Work out a payment plan with the debt collection agency. If your delinquent credit card debt has already gone to collections, contact the debt collection agency and try to work out a payment plan. You may even be able to negotiate a debt settlement that allows you to resolve your debt by paying off the majority of your balance — usually between 50 and 80 percent — in a lump sum payment. However, be aware that settling a debt for less than you initially agreed to pay can harm your credit score.
- Contact a non-profit credit counselor. A credit counseling agency may be able to help you create a debt management plan with your card issuer that includes a lower monthly payment, and perhaps a lower interest rate. Note that you may be required to close your credit card account if you go this route.
Is your credit card still usable during delinquency?
During the early days of a credit card delinquency, you are still able to use your credit card. Keep in mind that if your delinquency extends past 60 days and your credit issuer applies a penalty APR, you’ll be stuck paying higher interest rates on both your outstanding balance and any new purchases you charge to your card.
If the debt delinquency timeline continues beyond four months, your bank or credit card issuer may close or cancel your credit account. This means you will no longer be able to use your credit card to make purchases — but you’ll still be responsible for paying off your unpaid debt.
When and how to remove delinquency from your credit report
If you have a delinquent credit card debt that has not yet been charged off or sent to collections, making timely debt payments is the best way to reduce the impact of the delinquency on your credit score. Your credit report will still show that you missed a few payments, but a strong history of on-time payments can overcome a brief period of delinquency.
Negative credit report items such as missed payments and collection accounts typically fall off your report after seven years. If old debt has not fallen off your credit report after seven years, contact the three major credit bureaus (Equifax, Experian and TransUnion) and request that they remove the delinquent debt from your credit report.
You may also have a delinquent debt on your credit report that is not actually yours. Believe it or not, one in five consumers discover errors on their credit reports — which is why it is important to request copies of your credit reports regularly and dispute any errors you find. If your credit report includes a delinquent debt that you don’t recognize, get the debt removed as quickly as possible. That way you can maintain the credit report — and credit score — that you deserve.
What should I do after I pay off my delinquency?
The best way to go about moving on after delinquency is by taking a closer look at your overall credit habits. In order to avoid falling into an endless cycle, establish more diligent credit habits. Consider the following tips to help you avoid credit card delinquency in the future:
- Set up autopay: If you’re managing multiple credit cards at once, remembering when to pay your credit card bill each month can be mind boggling. In order to avoid missing payments and possibly facing late fees or a penalty APR, consider setting up automatic payments. With autopay, you don’t have to worry about falling behind on your payments because your balance (or minimum payment) will be sent automatically.
- Stop spending on your credit card: If you are worried about digging too big of a hole with a specific credit card, put it away temporarily. Catching up on payments will be significantly easier if you aren’t consistently adding to your debt. Put your credit card in your sock drawer and rely on debit for the time being.
- Communicate with your issuer: If you are worried about falling behind on a credit card payment, call your issuer and see how they can help you. For example, they may be able to negotiate a payment plan that lowers your monthly payments. At the end of the day, it never hurts to ask.
The bottom line
Credit card delinquency can leave a long-term negative mark on your credit report, but it can be avoided with the right financial habits. If you are facing delinquency or recovering from a recent run-in with it, establishing a sound plan for using credit responsibly will help you unlearn bad financial habits.