What Happens When My Credit Card Goes Delinquent?

It’s not uncommon for people to miss the occasional credit card bill, but what happens if your bill is overdue by more than a few days? 

What does credit card delinquency mean?

Credit card delinquency happens when your credit card payment is late by 30 days or more. According to the FTC, a delinquent credit card may result in late fees and potentially negatively impact your credit report. If left unpaid, delinquency can even result in credit card suspension, account closure, and eventually the account being charged off (and possibly sent to a collection agency). The good news is that you may have options to fix this problem and lessen the impact to your credit score and credit history.

If you’ve faced a credit card delinquency that took a hit to your credit score, one way that may help rebuild your credit is with a secured credit card. The Discover It® Secured Credit Card can help you build/rebuild credit with responsible use.¹

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What do I do if my card is delinquent?

If you are late on your credit card payments, you should try to catch up as fast as possible to get your account back in good standing. If you’re struggling to make payments, you can contact your credit card company and see what payment options you may have. 

If you don’t catch up on your credit card payments, your card issuer may suspend, revoke, or charge-off your account.

Credit card delinquency and suspension

When a credit issuer suspends your delinquent account that means you can no longer make purchases on your card. Sometimes credit card companies will require you to make a full minimum payment and may have to review your account before reversing the suspension. 

Did you know? You can avoid delinquency on your card by making your credit card payments on-time. One way that you can do this is by setting up automatic monthly payments for your credit card. Learn more.

How does credit card suspension affect my credit?

Your delinquent credit card may impact your credit score, especially when combined with other factors. This is because your payment history typically makes up 35% of your credit score, according to the Office of Financial Readiness, so delinquency due to late payments may have a negative impact on your credit score. 

What can I do if my card issuer suspends my account?

If your credit issuer suspends your account, you may be able to get your credit card account back in good standing by paying your account current and maintaining a positive payment history.

If you have been going through financial hardship and don’t have the money to pay yet, you might be able to get back on track by contacting your credit card company to find out if you’re eligible for a repayment plan.

Credit card delinquency and revocation

If more time passes and you still haven’t made the minimum required payments towards your past-due balance or agreed to a payment plan, your card issuer may revoke your credit card. The time frame can vary by credit card issuer, but this generally happens after four to five months of missed payments. Once revoked, you will not be able to use the card again.

How does card revocation affect my credit?

If your card is revoked it can affect your credit utilization ratio, which is the percent of available credit you’re using. Your credit usage typically makes up 30% of your credit score, so using up too much of your available credit can have a negative impact. The lower your utilization ratio, the better. If you have a revoked account, that line of credit no longer counts as available credit, so the percentage of credit that you’re using goes up (which increases your utilization ratio).

Plus, if you have serious delinquency with payments on your account 60-90 days past due, besides your credit utilization ratio going up, the delinquency may also negatively impact your payment history. But even if you have a revoked card, you still have options. You can reach out to your creditor to discuss repayment options or seek the help of a nonprofit credit counselor.

How can credit counseling help with credit card debt?

With a credit counseling agency, you might be able to draw up a plan that could include lower payments and interest. These counselors will work with your creditor to come to an agreed repayment plan.

Credit card delinquency and charge-offs

A “charge off” is one of the final stages of credit card delinquency. Once charged off, the account has typically been in delinquency for about six to seven months without acceptable payments. 

How charge-offs impact your credit

Your card issuer may report your charge off to the credit bureaus (Transunion, Experian, and Equifax) and it may stay on your credit report for up to seven years. The resulting drop in your credit score depends on many factors, but charge offs are generally considered negative. 

You can seek help from your creditor to get through a delinquency, repay your debt, and keep the negative impacts to your credit score to a minimum.