How Delinquent Accounts Affect Your Credit

June 3, 2020 | by Jacob Hamilton

delinquent header

Though it’s nice to imagine a world where we could open credit card accounts without ever having to pay off the amount swiped, this simply isn’t the case. And while most people are aware that opening a credit card comes with the responsibility of making minimum monthly payments, this isn’t so black and white for others.

In fact, as young borrowers in their 20s increasingly open credit card accounts, missed minimum payments are becoming more common, raising average delinquency rates. If you’re thinking of opening a credit card account, it’s important to understand the basics of delinquent accounts and how they can affect your credit for years down the line.

What Is a Delinquent Account?

In short, a delinquent account is any account past due, typically 30 days after you’ve missed at least the minimum payment. Often, creditors won’t report this until you’ve missed two consecutive payments, especially for those who have an impeccable payment history and a clean account. This acts as a sort of buffer period, allowing credit card holders the ability to get back on track with payments without incurring any significant damages to their credit.

delinquent payments

Levels of delinquency

If your account becomes delinquent, a late payment is added and your issuer will start to contact you via phone, email or mail to prompt you to start making payments again. There are various levels of delinquent accounts, most commonly referred to in terms of days:

  • 30 days: You’ve missed only one minimum payment. This usually falls within the buffer period, and typically if you can make the required payment before the 30th day, issuers won’t report this level of delinquency to credit bureaus.
  • 60 days: You’ve missed at least two minimum payments. At this point, issuers will report this, and it will begin to negatively impact your credit score.
  • 90 days: You’ve missed three payments. Your credit score will see a relatively hard hit and could even fall as much as 125 points.
  • 120 days: You’ve missed a consecutive four payments, your credit score continues to drop significantly, and your account may be turned over to collections.

After 270 days of late payments, this failure to repay considers your federal loan to be in default.

account damage

What Are the Effects of a Delinquent Account?

Delinquent accounts can negatively affect your credit and loan privileges significantly as failure to make minimum payments signals to issuers that you are irresponsible with loans. Some of the biggest impacts include:

  • Credit score damage, in some cases up to 125 points
  • Can remain on a borrower’s credit report for up to seven years
  • Potential monetary penalties in the form of increased fees and interest rates
  • Suspended or revoked charging privileges
  • Legal action taken from debt collectors
  • How Do I Stop Delinquency?

The easiest way to stop the progression of delinquency is to begin making payments. However, it’s important to understand how these payments affect your current situation. If you make one minimum payment, you will remain at your current level of delinquency. However, it’s important to note that any payment that is less than the minimum amount will have no effect on your level of delinquency.

For example, if your minimum payment is $30, but you only have $15 to pay, you will still be considered delinquent and charged late fees. Thus, it’s worth saving until you have the full $30 to help ensure that you don’t enter the next level of delinquency by missing more payments.

late payment stays on your report

However, if you’re more than a few months deep, it’s not always the best case to wait until you have the full payment. For example, if you’ve missed two $30 minimum payments and have another approaching, it’s better to make a minimum $30 payment versus waiting until you have the full $90 to pay off. This will keep you in your current delinquency level as opposed to knocking you into the next date range and further affecting your credit score.

Once the total compromised minimum payments are paid off, your account will be current. After six months of on-time payments, you can request an interest rate reduction, which likely spiked due to missed payments.

How Do I Remove a Delinquent Account From My Credit Report?

It’s your responsibility to work tirelessly to remove any harmful entries that are reported on your credit history. Fortunately, there are steps you can take to help mitigate any past harm so that you aren’t left without the ability to use a credit card in your future.

  • Write a pay for delete offer: This is a type of negotiation in which you offer to pay for the account in full and, in turn, the negative claims will be removed from your account. Not all creditors will accept the offer terms, but it’s worth trying if you have the money to pay it off.
  • Send a goodwill letter: If you’ve already paid your account off, you’ll have to use another bargaining tactic. A goodwill letter, also known as goodwill deletion, is a letter you write to the creditor asking to have a negative mark removed from your credit report. In this letter, you might include information as to why you were late and how you’ve improved as a paying customer since. As the name suggests, the creditor doesn’t necessarily have to comply.
  • Be patient: If the above tactics have yet to yield positive results, sometimes all you can do is wait it out. Negative information can only remain on your account for seven years according to law, and while this seems like a long time, any positive credit can replace the negative as time passes. It’s imperative to be diligent with your credit if this is the case to reverse any harmful effects and get your credit back to good standings.

combat delinquent accounts

If the information on your credit report is false, you can submit a credit report dispute online or via mail with any proof. It will then be investigated by the credit bureau and removed if found to be wrongfully reported.

Preventing Delinquent Accounts in the Future

Opening a credit card account comes with ample responsibility, and unfortunately, life happens and debt can pile up quickly. If you have a delinquent account, it’s important to educate yourself and take the proper steps to repair your credit . The easiest way to do this is to open a new credit card to inject positive information into your credit history. By making on-time payments and maintaining low levels of credit utilization, you demonstrate to credit bureaus that you’re financially responsible.


Jacob Hamilton

Jacob Hamilton

GM of CreditRepair.com

With his master's degree from the University of Phoenix, Jacob has been working as the General Manager for CreditRepair.com for 2 years. Jacob is passionate about consumer finances and doing everything he can to make credit repair accessible....

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