An account generally becomes delinquent when you don’t pay the minimum amount by the due date. Missing the due date may have some immediate repercussions, such as late payment fees, while letting the payment go 30 or more days past due could cause it to be reflected on your credit report.
What is a delinquent account?
A delinquent account is an account that has a past-due balance after you miss a bill’s due date.
Creditors might charge you a late payment fee once your account is delinquent. They can also take other actions if you leave the bill past due for too long. For example, once you’re at least 30 days past due, the creditor might report your late payment to the credit bureaus, which can hurt your credit scores.
If a lender determines that a borrower won’t repay a delinquent account, they might charge off the debt and send or sell the account to a collections agency. This typically happens after the borrower has gone multiple billing cycles without paying. At this point, the account may be considered defaulted rather than delinquent.
How to find delinquencies in your credit report
Delinquent accounts won’t likely appear in your credit report until you’re at least 30 days past due and the creditor tells the credit bureaus about the late payment. Keep an eye out for letters or notices from creditors, and try to bring the account current or make a payment arrangement with the creditor before this happens to avoid hurting your credit.
If you have a delinquency on your credit report, it will be part of the credit account’s payment history. Delinquencies can stay in your credit report for up to seven years. Bringing an account current won’t remove the previous late payments from your credit history.
If a creditor sends or sells your account to a collections agency, the original account may be closed, and a new collection account could be opened. The collection account may appear in a different section of your credit report. The original account and collection account should be removed within seven years from the original delinquency date.
What are the potential consequences of delinquency?
Missing a bill and having your account go delinquent could result in several negative consequences:
- Late payment fees: Unless your account has a grace period, creditors might charge you a late payment fee as soon as you miss the due date.
- Lost promotions or benefits: You might lose promotional interest rates if you miss a payment. Credit cards may also impose a higher penalty APR on delinquent accounts.
- Additional fees and interest: Creditors and debt collectors can continue charging you interest on the past-due debt, and they may be able to add additional collection fees or charges to your balance.
- Damaged credit: Late payments can hurt your credit, and falling further behind or having an account sent to collections might impact your credit scores even more.
What to do if you have delinquent accounts
The best approach is to try to remedy the situation right away.
Try to bring your account current. If you missed a payment by accident, bring the account current and see if the creditor will refund any late fees.
Contact your lender. If you know you’re going to miss an upcoming payment, contact your lender before the due date and let them know. They may have hardship options that can help keep your account from becoming delinquent.
Look into debt consolidation. Consolidating multiple debts into a new loan could help lower your monthly payment and make it easier to manage your bills.
If your account is in collections, you could try contacting the collection department or agency to see if there’s an option for paying off the account over time or settling the debt for less than you owe.
For more information on understanding credit, see the following articles: