What does a delinquent account mean

When you miss a credit card payment, your account is considered delinquent. But it’s typically not reported to the credit bureaus until the payment is 30 days or more late. 

There can be lots of reasons why an account might go into delinquency: job loss, health issues or even just a forgotten payment. Fortunately, it’s fairly easy to fix when it’s addressed early. But the longer an account stays delinquent, the harder it can be to resolve.  

Keep reading to learn more about delinquency, including how it could affect your credit and how to fix or avoid it. 

What you’ll learn:

• A delinquent account is one where the monthly payment is overdue.

• Penalties for account delinquency can include late fees, loss of an introductory APR and a negative impact on credit scores.

• When an account becomes delinquent, it’s recommended that the cardholder contact their lender as soon as possible.

• Credit counseling is a possible next step for cardholders with a delinquent account.

A credit card account can be declared delinquent when a cardholder fails to make the minimum required payment. Generally, delinquent accounts are not reported to the credit bureaus unless a payment is late by more than 30 days.

Depending on how long an account is in delinquency, consequences can include: 

• Late fees: If your payment is late, you could be charged a late payment fee. And if your credit card has a grace period, you could lose that. 

• Higher interest rates: Interest rates could go up, and you could lose any introductory rates. 

• Credit bureau impacts: Delinquency could ultimately hurt your credit. It could appear on your credit report and impact your credit scores. You can check your card agreement to learn more about how your issuer handles credit reporting.

• Collections communications: If you miss too many payments, collections activities may begin. You may receive calls and letters asking for payment.

• Account charged off: If the account goes 180 days past due, it could be “charged off.” This means the account is closed and written off as a loss, but the cardholder is still responsible for payments.

Depending on the length of time an account has been in delinquency, there are things you can do to improve the situation. Here are some.

Some of the negative effects of a late payment can be avoided if you can pay at least the minimum due as soon as possible.

If you can’t make the minimum payment, the  Consumer Financial Protection Bureau (CFPB) recommends contacting your credit card issuer as soon as possible. Rather than letting debt and missed payments stack up, you can see what your options are.

Credit counseling services are designed to help people learn how to better manage their money. After reviewing your financial situation, they may offer individualized advice on things like ways to get out of debt. They may also negotiate a debt management plan with creditors on your behalf. This might provide a longer repayment period at lower interest rates and no fees.

You can get a list of government-approved credit counseling agencies by calling the National Foundation for Credit Counseling (NFCC) at 800-388-2227 or visiting this list of counseling services from the U.S. Department of Justice (DOJ).

The best way to avoid delinquencies on your credit report is to make on-time payments of at least the minimum amount due every month. But as the CFPB says, “You should try to pay more than the minimum to reduce your interest costs and pay off your balance more quickly.”

If you’re concerned about missing payment deadlines or being able to pay everything when it’s due, you could consider:

• Setting up automatic payments: Automatic payments can be helpful. You can connect your credit card to a bank account and specify how and when you’d like to transfer your funds to pay off or pay down your balance.

• Creating a budget: A budget can help you stay on track with your spending. It also helps you identify areas where you can cut unnecessary expenses. Using a budget worksheet can be helpful in this situation.

• Contacting your lender: The CFPB recommends contacting your credit card issuer even if you only think you might miss a minimum payment.

• Establishing an emergency fund: An emergency fund can protect you from things like a car breakdown or a big medical bill that can destabilize your finances.

• Looking into debt consolidation: Debt consolidation allows you to combine multiple debts into one new loan, ideally one with a lower interest rate. But it’s important to make sure you understand the loan terms and conditions before applying.

• Getting a balance transfer credit card: A balance transfer credit card lets you consolidate multiple balances into one credit card account with a new issuer. Ideally, the new account has better repayment terms or a lower interest rate, or both. Again, check out the card’s terms and conditions before you apply.

Here are some frequently asked questions about delinquency.

Late payments can stay on your credit report for as long as seven years. But unless the account is charged off, the negative effects of delinquency on your credit scores tend to decrease over time.

You can’t remove an accurately reported delinquency from your credit report. And it’s a scam if any company claims they can. But you can dispute an inaccurately reported delinquency that arises from error or fraud. You can look to the CFPB for guidance on how to dispute an error on your credit report.

A delinquent credit card account is any account with a missed payment. The longer it goes without payment, the more serious it can get. But there are ways to avoid it and handle it. Regularly monitoring your credit can help. You can get free copies of your credit reports from each of the three major credit bureaus by visiting AnnualCreditReport.com.

And with CreditWise from Capital One, you can check your credit report and score anytime without affecting your credit scores. CreditWise is free, even if you’re not a Capital One customer.