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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. When you borrow money, your lender will give you a timeline of when you need to pay back the cash. Student loans, credit cards, mortgages and auto loans – all of these come with the expectation that you will submit a minimum monthly payment prior to a certain deadline. As long as you make the cutoff for those payments, your account will be in good standing. However, if the deadline passes without any money going to the lender, you’ll wind up with a delinquent account. As you work to maintain your financial wellbeing, it’s important to understand what is classified as delinquent, what it means for your credit score and what to do to avoid serious consequences. What is a delinquent account
When you hear the word delinquent used to describe a person, you’ll typically associate it with someone who has broken the law. In the financial world, being delinquent is similar: The borrower has broken the terms of his or her contract to pay the money back. Many consumers have delinquent accounts. For example, around of homeowners are delinquent by at least 30 days with their mortgages. Different levels of delinquency with different consequences. A delinquent account might come with something as simple as a late fee or something as terrifying as losing your house or your car. When is a borrower reported as delinquent
There is a difference between being delinquent – which you technically are as soon as the payment deadline is past – and being reported as delinquent. If you miss a payment that is due today but manage to submit it tomorrow, your account will likely not be reported to any of the credit bureaus. You will probably need to pay a late fee – although, depending on the lender and your history, you might even be able to get that fee waived if it’s your first missed payment. Some types of loans offer more generous buffers for reporting your failure to pay, too. For example, student loan borrowers with federal student loans aren’t reported as delinquent until they have failed to make payments for 90 days. Time since last payment Consequence Less than 30 days You will likely pay a late fee that will depend on the amount of the loan. More than 30 days You will pay a late fee, plus a report will be set to the three major credit bureaus. More than 60 days You will pay more late fees, and you will receive phone calls and letters that are working to track down the money. More than 90 days Your account may be closed if it’s a credit card or personal loan, and if it’s a home or auto loan, you could receive a notice of the intention to foreclose or repossess the vehicle. More than 120 days Your name is passed on to a debt collection agency, and you can expect very aggressive tactics to track you down. The agency may even call your friends or family, too. If the debt involves your home or your car, you are dangerously close to losing the property – if you haven’t already. How does a delinquent account affect your credit score
One of the most critical pieces of your is maintaining a history of on-time payments. In fact, your payment history makes up 35 percent of your overall credit score. So, if you have delinquent accounts, your score can take a serious hit – particularly if the delinquency is extending past the 30-day mark. Being a couple of months late on your payment might sound like a short window of time, but the impact of that bad decision can linger for . A delinquency can be on your credit report for up to seven years. So, if your credit card account is reported as delinquent in April 2022, you could be dealing with the fallout until April 2029. Think about that: If you fail to make a payment on your credit card this month, that negative mark might still be on your credit report years from now when you’re trying to buy a home. If it continues to drag down your credit score, you will have to deal with paying a higher interest rate – or worse, not being approved for the loan. How can you avoid delinquent accounts
If you’re staring down the possibility of letting one of your accounts slip into delinquent territory, you can take action to protect yourself from doing damage to your credit. Consider these steps to steer clear of the consequences of having a delinquent account: Consolidate your debts
If you’re carrying debt across multiple accounts, you can look into . These will consolidate your debts into one loan, so rather than juggling different payment dates for all your accounts, you’ll make one payment each month. If you have a decent credit score, some of these consolidation options come with interest rates that will beat credit cards. However, pay close attention to all the fees and compare a range of loans to see if the costs are worth it. Tap into your emergency savings account
While an is designed for unexpected situations, that backup cash can play an important role in keeping your account in good standing. If you do use it to pay down this month’s debt, remember to replenish your emergency savings fund as soon as possible and reevaluate your budget to prevent it happening again. Talk to your lender before the payment date arrives
If the payment due date is looming, call your lender. In many cases, you may be able to qualify for a hardship program – particularly if you are in a challenging situation such as a job loss or a medical emergency. By proactively asking for assistance, you will demonstrate that you are doing all you can to avoid delinquency. Look at your budget
What expenses can you eliminate to shift some dollars to paying off your debt? Are there memberships or subscriptions that you can cancel to free up more room for your debt payments? Trim all your other costs to try to come up with the payment this month. Look for debt and credit counseling
is a non-profit organization that can help connect borrowers in distress with counseling services to develop strategies for getting on a better financial path. These services can be especially valuable if you are regularly struggling to make ends meet and worrying about your debts. Consider a debt relief company
If you have exhausted all your options, you may need to hire some help. can help you avoid the last resort of bankruptcy by negotiating your debts for a smaller payoff. However, these companies aren’t free. You’ll pay for their services, and some of these companies can be a bit shady. Beware of television advertisements with too-good-to-be-true promises of the ability to eliminate all your debts immediately. What should you do to remove delinquent accounts from your credit report
If you wind up with a delinquent account, here’s a rundown of how to get that bad mark . Write to your lender: If your missed payment was a one-time rarity, consider pleading with your lender. While they don’t have to help you out, a personal letter that details your situation might be able to go a long way. Write to the credit bureaus: If it’s been seven years since your delinquency, the time is up. Review your credit report. If the negative mark is still there, send a letter to each of the with a request to have it removed. Manage the rest of your credit responsibly: Getting delinquent accounts removed can be tough. If you’re stuck with the mark on your credit report, focus on what’s in your control to help improve your score: making on-time payments with your other bills, keeping your credit utilization ratio low and limiting the number of credit inquiries. Bottom line
Late payments and delinquent accounts can haunt your financial house for many years. As you work to build your credit history, keeping all your credit accounts in good standing will lay the foundation for your long-term success. If you are staring at a mountain of bills, now is the time to educate yourself on . Pay it off now, so you can enjoy a debt-free – and stress-free – future. SHARE: Aylea Wilkins is an editor specializing in personal and home equity loans. She has previously worked for Bankrate editing content about auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information. Related Articles