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Just as your friends expect to be paid back after they cover you for dinner and a round of drinks, lenders and credit card companies want to be repaid when you put a balance on your credit card. Being late, or delinquent, on your credit card can have some serious repercussions to your credit file and cost you. Read on to learn more about what it means to have delinquent accounts, how it could impact your credit, and how you might be able to remove a delinquency from your credit report:
What Is a Delinquent Account?
The meaning of a delinquent credit card is that you didn’t make a payment before midnight on the day it was due. That being said, there are different degrees of delinquency, all of which bear different financial consequences. When your credit card account is reported to the credit bureaus and what stage of delinquency your account reaches over time is up to the lender. Typically, they won't report to the three major credit bureau agencies—Transunion, Equifax, and Experian—that your account is delinquent until after a full billing cycle, or around 30 days. When it comes to a delinquent account definition, “delinquent” and “default” are sometimes thought of as being one and the same. But they're different. While both have to do with missing payments, default is more serious, with greater consequences. Default usually means that you're late on payments for at least 30 days and the lender assumes you won't get that money back. In turn, they start taking action to get repaid, whether it's their in-house collections team reaching out to you, having a third-party collections agency tend to that task, or selling off your loan to a collections agency at a discount.
What Does It Mean to Have a Delinquent Account?
The delinquent account meaning with a credit card is that this account has not been paid even after the due date of the payment has passed.In addition to the damage to your credit score and being the subject of collection, a delinquent consumer will have their credit card charging privileges either suspended pending payment or revoked permanently.
Understanding a Delinquent Credit Card Account
When exactly a lender or a credit card company considers a credit card account delinquent and charges late fees depends on the lender. Here's an example of how delinquency with a credit card account might shake out: 1-30 days: Some lenders might have a grace period after your payment is late. For instance, a credit card company might consider a payment on time as long as you make your payment within 10 days of the due date. In turn, they won't hit you with any late fees. Other lenders might ding you with a late payment fee the day after you're late. However, most credit card companies won't report you delinquent to the credit card companies until you're late a full billing cycle, or 30 days. When your credit score sinks, you might find yourself moving from credit cards for good credit to qualifying for credit cards for fair credit and even credit cards for bad credit.To avoid your credit score from going too low, you can reach out to your lender and let them know you're aware that you're late on making a payment. Once 30 days have passed, it's harder to work something out with the credit card company and get your fees waived. Explain your situation sooner rather than later. The credit card company might have a hardship department that can offer some relief options, such as waiving late fees, letting you temporarily skip a payment, or offering an installment plan that's based on what's doable for you. 30-60 days: Once the 30-day mark has passed on your payment, the lender will most likely start the late fees and penalties. As mentioned before, when you're delinquent after 30 days, it's very difficult to get these fees waived. After your account hits 60 days late, your credit score will take a steeper hit. 60-90 days: At this point, if you're still delinquent on your credit card payments, expect the efforts of the lender to collect on what's past due to ramp up. This might mean phone calls, emails, and notices in the mail. A 90-days past due mark might also show up on your credit card, thus further dinging your credit. 90-120 days: After three months, the credit card company might send you a letter via certified mail demanding that you pay up on what you owe. They might even let you know that they'll be closing your credit card account permanently, as they plan on selling off your outstanding balance to a debt collections agency. During this period, it's usually your last chance to work with the credit card company to repay your debt before it enters default.
Example of a Delinquent Credit Card Account
Barbara has a personal credit card account and uses it to pay for miscellaneous purchases and when she goes on vacation. She has an $800 balance on it and usually makes the minimum payments. However, she forgets to make a payment. Ten days after she's late on her credit card, the credit card issuer dings her with a late fee. After 30 days have passed, the credit card issuer reports her account as delinquent to the major credit card bureaus. Fast forward 120 days, and after a slew of notices via phone, email, and mail, her credit card lets her know the debt on her account will be sold off to a third-party collections agency.
How Do Delinquencies Affect Your Credit?
Delinquencies on your credit card can impact your credit score. The severity of the impact to your credit report depends on how many payments were missed and how much time has passed. For instance, after missing two payments, this might have a minimal impact on your credit score. But if you miss three or more payments, your credit score can dip dramatically, by as much as 180 points. Once the delinquency is reported to the credit card agencies, it will show up on your credit profile. Credit card companies usually don't report your delinquency to the credit bureaus until after 30 days.
How Do I Remove a Delinquency From My Credit Report
Here are some ways you can remove a delinquency from showing up on your credit report:
Waiting It Out
The easiest option is to wait until your delinquency drops off from your credit report. Typically, delinquencies stay on your credit profile for up to seven years. Even if you end up paying off what's owed, the delinquency remains on your credit report. The delinquency date is the date from which you missed the payment. Let's say you were late in May 2022. In that case, your delinquency would fall off your credit report May 2029.
Disputing It
If you feel that your account hit delinquent status in error, you can file a dispute. You can order a credit report for free from each of the three credit bureaus. If you spot something that looks incorrect, you'll need to reach out to the specific credit bureau, as information from one credit agency might not be the same as from another agency. You can file a dispute by email, online, or snail mail. You'll need to include a copy of the credit report and a letter or note detailing exactly the error or mistake. Credit bureaus have 30 days to get back to you.
Negotiating for Early Removal
In some cases, you might be able to negotiate for early removal of a delinquency on your credit card account. But expect to be able to pay the balance in full or a significant portion of it in full. You can try to negotiate directly to the credit card companies about your delinquency, or you can work with a debt settlement company. A debt settlement company might help you with debt forgiveness. If it's moved past delinquency status to default, you might need to try to negotiate your debt with the collections agency, or whoever owns the debt. When you negotiate with a debt settlement company, you negotiate how much you pay, and also to get the delinquency taken off.
How Long Does an Account Stay Delinquent?
As mentioned, a delinquent credit card account shows up delinquent on your credit profile for up to seven years, even after you pay off what you owe. Note that while your account is delinquent the day it's late, credit card companies usually won't report to the credit card bureaus until after your delinquency hits the 30-day mark.
The Takeaway
If you're late on a payment, your credit card account is considered delinquent. It's best to make your payment as soon as possible. Otherwise, you will get hit with late fees and penalties, and, once it’s reported to credit agencies, your credit score will sink. Contact your credit card issuer to see if you can work out a payment plan.Want to explore the option of credit building credit cards? Lantern by SoFi can help. Fill out one form to see offers in our network, including cards for credit builders.Find out more about credit cards at Lantern by SoFi.
Frequently Asked Questions
What does it mean to have a delinquent account?
How do I remove a delinquency from my credit report?
How long does a delinquent account stay?
Photo credit: iStock/JLco - Julia Amaral
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About the Author
Jackie Lam
Jackie Lam is a freelance writer with experience covering small business, budgeting, freelancing and money, and personal finance. She has written for more than 60 outlets, including Salon.com, CNET, BuzzFeed, Business Insider, and Time's NextAdvisor. She is currently working on her AFC® financial coaching certification to help artists, freelancers, and small businesses.
