When you’re running short on cash, it might not seem like a big deal to miss a credit card payment or two. You’ll make plans to catch up the following month, only to find that money is still tight. By the time the late payment hits the 30-day mark, the delinquency can start to affect your credit. Let’s take a look at what happens when you become delinquent on your credit cards.
You’ll Pay More
Credit card companies can hit you with a late payment fee even when your payment is just a few hours past due. Stack up a few late payment fees and it makes it even harder to start paying down your balance. Be sure to make every effort to pay your credit card bills on time, every time, even if it’s just the minimum payment (until you can start paying more).
You’ll Hear from the Creditor
Many creditors begin contacting card holders with reminders within a few days of a missed payment. And collection efforts begin in earnest at the 30-day mark, when a payment is officially considered late. Although certain aggressive collection tactics are prohibited by law, that doesn’t stop many collectors from engaging in them. Here is information on how to handle debt collector harassment.
It Will Be Difficult to Obtain New Credit
Having even one delinquent credit card showing on your credit report is a big red flag to other creditors. It tells them you have a hard time managing your credit and finances. As a result, they are not likely to extend you any new credit. And any credit you are able to obtain — usually from predatory lenders — will come with sky-high interest rates.
Your Credit Will Suffer Overall
Payment history makes up the largest portion of your credit score (35%). Having one or more delinquencies on your credit report will cause your credit score to drop. The longer the delinquency continues, the more your credit will suffer. Serious delinquencies of 120 days or more with no payment are charged off, causing damage to your credit that can be very difficult to recover from.
If you are having trouble making even minimum payments on one or more credit cards, contact yourcreditor(s). They may offer temporary hardship options that can help you minimize the damage. For a longer-term solution, consider free credit counseling. You’ll receive a personalized budget and action plan for getting out of debt.