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When you apply for a loan or a credit card, these creditors evaluate your credit history to see how risky of an investment you are to them. One of the red flags that these lenders are looking for is delinquencies, a period where you had an overdue payment for an extended period of time.
It’s in your best interest to avoid these and the subsequent late fees, higher APRs, and hits to your credit score. However, if you find you’re already in this situation, you still have options to salvage your credit.
A delinquency on your credit report refers to a missed minimum payment on borrowed money, on either a loan, mortgage, or line of credit. Technically, your credit account falls into delinquency the first day your payment is past due. However, creditors usually don’t report a missed payment to the credit bureaus until that payment is 30 days past due, at which point it appears on your credit report.
This has serious ramifications for your credit score, which indicates to potential lenders how likely you are to repay a debt. If a lender sees an extended period of time on your credit history where you didn’t make a required payment, it might lead them to think that if you’ve done it once, you’re likely to do it again.
Credit card delinquency comes in stages if you continue to miss payments for multiple months. Each stage comes with a kick to your credit score, which compounds exponentially as you fall further into delinquency, and additional consequences.
30 days past due: At 30 days without payment, your missed payment officially falls into delinquency. Your credit card company will report the payment to the three major credit bureaus, and you’ll see that reflected in your credit score, which will take a hit.
60 days past due: The consequences start compounding the longer a bill is left unpaid. After 60 days, most credit card companies will hit you with a penalty APR for failing to make a payment on time. The penalty APR period will vary depending on your credit card company. Most penalty APRs end after you make a certain number of consecutive on-time payments; others are applied indefinitely.
90 days past due: A credit card company might send your debt to a third-party collections agency after 90 days of delinquency. These agencies will hound you with phone calls in an attempt to push you to make good on your outstanding debt. On top of this, keep in mind that with each passing month, your credit score continues to decline.
180 days past due: At 180 days into delinquency, credit card companies are required to charge off your debt, meaning they write the debt off as a loss and close your account off to future charges. However, this doesn’t mean you’re free of your debt. A credit card company may send your debt to a third-party collection agency. If your debt is above a certain amount deemed sufficient for legal action — usually over $8,000 — a credit card company may also sue you.
While you cannot remove a correctly reported delinquency from your credit report on your own, your creditor can. You can try asking your creditor to forgive the late payment and remove it from your credit history through a goodwill letter. This scenario is most probable if you have a good reason for missing your payment such as an illness or disaster out of your control. If for some reason, the late payment wasn’t your fault and you can provide documented proof, that may also be a reason for your creditor to forgive your late payment.
Even if you don’t fall into these categories, if you have a good relationship with your creditor or otherwise spotless payment history, your creditor may agree to make a goodwill adjustment.
Creditors are under no obligation to grant your adjustment request. If your creditor refuses to remove a missed payment from your credit report, you’re stuck with the delinquency until it drops off your credit report. Fortunately, your credit history is constantly cycling.
A delinquency will fall off your credit report seven years after the date your account first fell into delinquency, also known as the original delinquency date. Even before that seven-year mark, as a delinquency ages on your credit report, its effect on your credit score will fade.
If a delinquency is accurately reported, going through your creditor is your only option to remedy the situation. However, you may find that a delinquency was incorrectly recorded on your credit report. Perhaps you made the payment on time, or it’s been over seven years since your account first fell into delinquency. In that case, you will need to dispute the delinquency with each of the three major credit bureaus: Experian, Transunion, and Equifax.
The first thing you will need when you file a credit report dispute is a copy of your credit report. You’re normally entitled to one free report per year from each credit bureau, which you can request at AnnualCreditReport.com.
Before you file your dispute, you will want to prepare the following documents and information:
With those documents in hand, you should file a dispute with each bureau.
Experian: You can file a dispute at Experian through their online disputes hub or the phone number listed on your credit report. You can also file your dispute through the mail at Experian, PO Box 4500, Allen, Texas, 75013
Equifax: You can dispute an Equifax credit report through their credit report services hub. You can file disputes over the phone at 888-397-3742 or by mail at PO Box 740256, Atlanta, Georgia, 30374-0256
TransUnion: File a dispute through TransUnion’s credit disputing hub. You can call 833-395-6941 for a dispute expert at TransUnion or through the mail at TransUnion Consumer Solutions, PO Box 2000, Chester, Pennsylvania, 19016-2000
How to get out of delinquency
To get out of delinquency, you will need to settle all the minimum payments that have accrued while you were in delinquency.
For example, let’s say you’re 90 days into delinquency with a minimum payment of $35 each month. Even if you’ve finally paid off that first $35 that initially put you into delinquency, you still have two minimum payments, one that is 60 days overdue and one that is 30 days overdue, left outstanding. You need to pay those off to finally be free of delinquency.
If you’re finding it difficult to make your payments, it is also possible to negotiate with your creditor and set up a payment plan. You may also qualify for a hardship payment program that some credit card companies offer. In any case, it’s best to communicate with your creditor so they aren’t left in the dark with a debt to settle with you.
Credit card delinquency frequently asked questions (FAQ)
