Credit Card Delinquency: How It Works, Levels of Severity & More

 Credit Card Delinquency

While credit card delinquency rates have declined from their Great Recession peak, there are still millions of Americans struggling to deal with past-due credit card bills. It’s therefore essential that you understand how delinquency works – especially since the issue isn’t as straightforward as it might seem at first.

A consumer is characterized as being delinquent when they have fallen behind on their payment obligations for a monthly bill. When it comes to credit cards, delinquency doesn’t mean that you’ve failed to pay off your full balance in a given month, but rather that you did not make the required minimum payment.

The information in the sections below will help you avoid late payments and credit score damage as well as mitigate the impact of past-due bills and ultimately keep your credit card account in good standing.

How Different Levels of Delinquency Affect Your Credit

Credit card delinquency is measured in terms of how many days late your payment becomes. This dictates when credit card companies will report you as being late to the credit bureaus as well as how much credit score damage you incur.

  • 1 – 29 days: At this point, you will have missed only one payment. If you can make the required minimum payment before the 30th day, you will avoid credit score damage, as credit card companies do not report this level of delinquency to the credit bureaus.
  • 30 – 59 days: In this case, you’re behind on two payments – one of which is at least 30 days late. Credit card companies will report delinquency, but it won’t hurt your credit too badly.
  • 60 – 89 days: You’re now behind on three payments. One is at least 60 days late, another is at least 30 days late, and the last one is at least one day late. At this point, your credit score will be hit hard. If you previously always paid your bill on time, your score could drop as much as 100 – 125 points.
  • 90 – 119 days: You’re now behind on four payments – the first being at least 90 days late, the second at least 60 days late, the third at least 30 days late, and the fourth at least one day late. Depending on the credit card company, your account could be turned over to collections at this point. Either way, your credit score will continue to drop.
  • 120+ days: At this point, you’re late on five different payments – the first being at least 120 days late, the second 90+ days late, the third 60+ days late, the fourth 30+ days late, and the fifth at least one day late. Collections calls will increase, and the impact on your credit score will be significant.

How to Get Out of Delinquency

While you may assume that you should pay what you can when you can, that’s not necessarily the case, and the last thing you want is to make a payment that will not benefit your situation. Rather, the amount that you can afford to pay will dictate whether or not doing so is wise since a minimum payment – at the very least – is required to prevent delinquency from progressing. For example, suppose your minimum payment is $50 and you only have $25. Even if you pay that amount, your credit card company will still consider you delinquent and will assess late fees accordingly. It’s therefore in your best interest to save the money until you have the full $50. This will help you avoid falling too far down the slippery slope of delinquency.

Now, let’s say you’ve missed two $50 payments and have another due date coming up. In order to fully climb out of delinquency and become current on your bill, you would need to pay $150 total (to cover the two missed payments as well as your current month’s bill).

With that said, you don’t need to wait until you have the full $150 to make a payment that will benefit your situation. Having missed two minimum payments, you will be in the 30-59 day delinquency range, which means making one minimum payment will effectively cover the current month’s bill and keep you in that range. In other words, you won’t fall further down the delinquency slope, but your situation won’t get any better. Paying $100, on the other hand, will cover the current month’s minimum payment as well as one of the payments that you missed, bringing you into the 1-29 day delinquency range.

In order to go back to current status in this example, you would need to pay the two missed payments plus the current payment due – a total of three minimum payments.

Once you become current on your credit card bill, you should start counting the months. After six months of on-time payments, you have the right to request an interest rate reduction under the CARD Act.

Delinquency Assistance

Delinquency can trigger a number of unwelcome developments, from increased fees and interest rates to the revocation of spending privileges and significant credit score damage. It therefore has the potential to leave you facing high costs across your financial life and without the credit access needed to make plastic-only purchases, such as car rental and hotel reservations.

You’ll therefore need to effectively rebuild your financial situation. Depending upon the extent of the damage caused by your delinquency, this might entail:

  • Exploring Debt Solutions: From payment plans to debt forgiveness to bankruptcy, there are a number of ways in which consumers who are experiencing financial hardship can garner a measure of relief and improve their payment status. CardHub’s Debt Solutions Overview will help you compare these options.
  • Scrimp & Save: If you have the financial means to pay your bills but simply made some unwise spending-related choices in the past, you probably won’t be eligible for debt relief. As a result, you will need to put your nose to the grindstone and gradually pull yourself back to current payment status.
  • Request a Credit Limit Increase: If your credit line was cut due to your payment problems and you have since demonstrated a consistent ability to pay on time (at least 6-12 months), you can request that your issuer re-instate your spending power. You can learn more about that process in our article on asking for a higher credit limit.
  • Rebuild Your Credit: Responsible credit card use (i.e. making on-time payments and maintaining low levels of credit utilization) is the best way to build or rebuild your credit standing. If your credit card account was deactivated due to delinquency and you are having trouble getting approved for a new credit card, which you need to get positive information flowing into your credit reports on a monthly basis, it’s good to know there are certain guaranteed approval credit cards that offer the same credit building benefits as any other type of card. These cards require a security deposit that will double as your spending limit, thereby preventing you from overspending and reducing issuer risk.

Bottom Line

At the end of the day, the one thing you should not do is let unopened bills pile up while you get bombarded with calls from creditors. Continuing to ignore delinquency will simply make your problems worse, as fees and credit score damage accrue. As a result, if you can’t make your minimum payments, talk to your credit card company about options and look into the various debt solutions that are at your disposal.

 

Image: alexskopje/Shutterstock

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POST YOUR COMMENT
Sep 6, 2014
Photo of Joey B.
By: Joey Baxs
I have a 30 days past due on my credit report. I was in a horrible motorcycle crash with lose of memory. I had a clean record for the past 14 years with no late payments. My score went from 780 to 705. I called asking for a good will judgement and they said they couldn't help me. I think this is bullshit since I've never been late with this financial outfit. How long will it take for me to get back up to a 780?
Sep 12, 2014
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Card Hub
No one can tell how long it will take for the credit score to recover but as long as you continue to be current on all your debt obligations, this 30 day delinquency will count less and less on the overall score.
Aug 29, 2014
Photo of Sara H.
By: Sara Hooper
I have a 60 day delinquency on my credit report from 11/2012. I never received my statement - electronic copy - due to my email address being compromised. I had pretty much discontinued using the card but used it for one purchase. 3 months later I see the delinquency on my credit report and pay off the balance. I closed the account. I had numerous conversations with the credit card company and was under the impression the delinquency was removed entirely from the file. The card was closed in March 2013. Is there any hope that the damage can be undone to a closed account? TransUnion removed the negative information, more
Jun 3, 2014
Photo of Colin B.
By: Colin Bisson
So my wife is behind 5 months of payments on a credit card. We discovered this on her credit report. She has no recollection of opening that account so we disputed it. In the meantime, if we pay it just to clean up her report, will it reflect positively and show it as no longer past due once we get it all caught up and will it improve her score?
May 26, 2014
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By: Christy Melendez
What if you have already lost that credit card. Like a department credit card and it's been years since you have paid it. And you get one of those "pay this amount and your debt will be cleared". Is it good to do that? Will it make a difference in your credit history?
May 27, 2014
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Card Hub
What you are asking is not very clear. Could you please give us more information on your situation?
Jun 3, 2014
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Colin Bisson
Do you mean a settlement offer on past due balances? As far as I know (a CardHub staff member would likely know more so don't quote me on this) accepting a settlement offer can impact your score more negatively than if you were to pay off the balance in full because they are considering the rest of the amount charged off.
Apr 18, 2012
Photo of Maggie B.
By: Maggie Brown
I lost my job last month due to the closure of my company. I am 30-60 days behind in 5-7 credit cards. My phone is driving me nuts. 24 calls a day from 8 til 8:30, Mon-Sun. I Know 4 of these accounts are from the same collector. I will pay them as soon as I heal and go back to work next month. But for now what can I do? bUT STRESS.
Apr 18, 2012
Photo of Card H.
Card Hub
Sorry to hear about your job loss. Here are three options in order of preference:

1) Call your creditors, tell them about your hardship and see what they can do for you. Do not agree to anything that you cannot comfortable do!

2) Go to http://www.cardhub.com/credit-card-debt/ and click on the 'Free Consultation' button under Debt Management. You will be connected to the largest NONPROFIT credit counseling agency in the country and they may be able to help you.

3) Turn off your ringer and deal with them once you have a job. They cannot do anything if you do not have any income or assets.

Good luck!
Apr 6, 2012
Photo of Anthony N.
By: Anthony Natoli
I have 3 60 late payments in a row on my credit card. I am now caught up.. how does 3x's 60 in a row impact my credit?
Apr 6, 2012
Photo of Card H.
Card Hub
Unfortunately all these late payments must have had a very adverse impact on your credit. Just keep paying on time and the longer you do that the less important those delinquencies will be. Also you can try our free estimator to get a better sense of how good your credit may be: http://www.cardhub.com/credit-check/
Feb 17, 2012
Photo of Bonny
By: Bonny
Re credit line reduction. I just found that for one missed payment (min. charge $20)25 days late, my credit line has gone from $15,000 to $2,000! To recuperate it, 6 months of perfect history etc.The note on my acct.site states credit is reduced in case of 1 or more late payments in 6 months. This is my first in at least a year. I pay in full or well over the min.Don't remember when I was last late. That seems an excessive sanction for 1 misstep of $20.I'll call them but would appreciate any suggestions
Oct 18, 2011
Photo of merno
By: merno
If I make a pymt every month to the credit card and they take the payment, can they still sue me? The pymt would be less than the minimum pymt......what can they do if I have lost my job?
Oct 20, 2011
Photo of Odysseas P.
Odysseas Papadimitriou
@merno - credit card companies will accept ANY payment amount that you send them and yes they can still sue you if you pay less than the minimum. Paying less than the minimum is useless because you still get hit with late fees and you still go deeper into delinquency in the same way as if you had sent no payment. If you have no income and no assets then you do not have much to worry, but if you have the means to pay them back then they will try to recoup their debt.
Jul 6, 2011
Photo of Odysseas P.
By: Odysseas Papadimitriou
@Daniel - yes they can
Jul 2, 2011
Photo of Daniel
By: Daniel
Can a cedit card or their collectors take you court,sue or take property to try and get money from the card holder? Also my died 2 months ago .The Card is in his name only.
Thank you,
Daniel

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