How Credit Card Delinquency Works
Your delinquent status is reported to the credit bureaus and is included in your credit report. A late payment is added to your account, and your credit card issuer may begin calling, emailing, or sending letters to urge you to get you caught up again. Your credit card issuer is permitted to raise your interest rate to the penalty rate when your payment is 60 days delinquent. The penalty rate will remain in effect for six months. It will go back to normal on your existing balance after you make six consecutive payments on time. Credit card delinquency isn’t the end of the road. Consumers have a chance to catch and bring their account back into good standing, but it will cost more to get caught up again. You must pay the entire past due balance, plus the interest and late fees that have accumulated. Your credit card account will eventually be closed and charged off if your balance remains delinquent. This typically happens when your payment is 180 days past due. You’ll no longer have the opportunity to catch up and bring your account current again after this happens. The entire balance is due and can be sent to a collection agency if you fail to pay it off with the original creditor. Contact your credit card issuer to find out your options for getting caught up again If you can’t afford to pay the past due balance.
Credit Card Delinquency Rates
National credit card delinquency rates indicate how households are handling their debt. Rising delinquency rates generally mean that people don’t have sufficient money to pay their debts, and this could signal larger economic problems. Delinquency rates at top commercial banks stood at 2.73% in the first quarter of 2020, according to the Federal Reserve Bank of St. Louis. But this rate is significantly less than it was in the second quarter of 2009, when the rate was 6.77% toward the end of the Great Recession.
Can It Be Removed From Your Credit Report?
Negative information is generally only removed from your credit report if it’s inaccurate, incomplete, can’t be verified, or if it’s beyond the credit reporting time limit. You can send a credit report dispute to have it investigated and removed if your credit report includes an erroneously reported credit card delinquency. Send copies of any evidence you have that can support your claim. Otherwise, credit card issuers are legally permitted to report negative information as long as it’s correct. Catching up on your payments is important to prevent your account from being charged off and your credit from being damaged even more, even if you can’t remove the delinquency. Your account status will show that your payments are currently on time when you catch up, and the negative details for the account will fall off your credit report after seven years.
