If you’ve recently missed a credit card payment or you’re about to miss an upcoming payment, you’re probably worried about the effects on your wallet and your credit score. While missing a credit card payment is never ideal, there are ways you can minimize the damage and get back onto solid financial footing.
Let’s talk about what happens when you miss a credit card payment and the steps you can take if you find yourself in this position.
What Happens if You Miss a Credit Card Payment?
This all depends on how many payments you’ve missed and how quickly you take action. One missed payment can result in a late fee, higher interest charges, or a lower credit score.
If you are currently in an introductory offer or some other promotional no-interest period, then the 0% interest will likely be canceled. Most no-interest promotions have a stipulation in the terms and conditions that if you have any late or missed payments, the promotional period will be ended. Additionally, you may receive a penalty APR if you have a low APR.
Credit cards usually have a grace period before a late payment is reported to the three major credit bureaus. You may also be able to negotiate a payment deferment if you reach out to the creditor right away.
One missed payment that is corrected within a couple of weeks likely won’t have hefty consequences for you, especially if you’ve never missed a payment before and you communicate with your creditor.
On the other hand, if you’ve missed multiple payments, the consequences may be more severe.
How Does a Missing Payment Impact Your Credit Score?
Payment history is the most important factor in calculating your FICO score. Your credit score can bounce back after time. The payments that are weighed most strongly are your recent payments.
Still, the missed payment won’t fall off your credit report completely for seven years. If the late payment is still on your credit report after seven years, you can contact the credit bureaus and ask to have it removed.
A missed payment can cause your credit score to drop anywhere from 60 to well over 100 points. A missed payment causes more of a dip if you have a higher credit score. For example, if you have a credit score in the ‘very good’ range, one missed payment could be enough to send you plunging into the ‘fair’ range.
Because a missed payment can bring your credit score down by so much, a missed payment can have very real consequences for your life. The difference between ‘very good’ and ‘fair’ credit could be the difference between whether you get approved or denied for an auto loan, mortgage, student loans, personal loans, or other line of financing necessary to your life. In many cases if you are approved, you could pay higher interest rates.
The longer the payment is past due, the more it will impact your credit score. A missed payment will become much more severe once it is 60 or 90 days late. This is usually once the account is considered default and may be sent to collections. Furthermore, you could be responsible for late payment charges.
The good news is that if you only recently missed a payment, you may still have time before this missed payment is reported to the credit bureaus. Most credit card companies won’t report a missed payment until the 30-day mark has passed. Some have a grace period of 60 days.
If your payment is only a week or two late, chances are good that you still have time to pay your bill without damaging your credit.
What Should You Do if You Miss a Credit Card Payment?
Communicate with your creditor
This is a good course of action any time you run into trouble with debts you owe. It’s always better for you to talk to the lender and determine your options.
You may be able to secure a payment deferment. This is when a lender agrees to let you pay the bill a little late. If you secure a deferment, you won’t have to deal with a late payment fee or other financial penalties. By granting a deferment, the lender is also agreeing not to report the missed payment to the credit bureaus.
This is the best outcome for this situation. Make sure you contact your creditor as soon as you can so that you have the best chance of getting a deferment.
This is something that you can do before missing a payment. You can reach out proactively, explain your situation, and let the credit card issuer know when you will be able to pay the bill.
Even if you aren’t able to get a deferment, it’s still always better to remain in communication with your lender. They’re more likely to cut you a break if they don’t have to chase you, and you keep in communication with them when issues arise.
Pay the bill as soon as you can
If the bill is more than 30 days late, you’ll need to make two payments to get your account into good standing. You’ll need to make the missed payment and pay the current month’s bill. There may be late charges to pay too.
Look at your account statement and be sure to pay off all the charges.
If you can’t pay your bill and are struggling with debt, look into debt settlement
This is an option for anyone who has many missed payments and doesn’t foresee being able to get caught up on their debt anytime soon.
Debt settlement is when you agree to pay part of a debt in a lump sum in exchange for having the remainder of the debt forgiven. You should start by contacting your lender and telling them you want to speak to someone about debt settlement.
Take steps to repair your credit
If you weren’t able to get a deferment or you’ve missed many payments, then it’s likely your credit score has suffered. Once your credit card has either been brought into good standing, or you’ve settled the debt, the next thing you’ll want to do is mitigate the damage to your credit.
You may not be able to do anything about the missed payment on your credit report, but you can build up your credit in other ways, such as by making all of your payments on time, maintaining a low credit utilization rate, and having a good mix of different kinds of debt that you manage responsibly.
There are only a couple of ways to remove the missed payment from your credit report, since it is a valid debt. If there is any incorrect information on your credit report, you can always petition the credit bureaus to remove it.
Go through your credit reports regularly and keep an eye out for discrepancies. If the account numbers, dates, amounts owed, or any other pieces of pertinent information are incorrect, then you have the right to have it removed.
This could result in the missed payment being taken off the report altogether.
Another way to remove the missed payment is to send a Goodwill letter to your creditor. A Goodwill letter is an official way of politely asking the credit card company to remove the missed payment. They’re under no obligation to remove it, but it doesn’t hurt to ask.
This is another reason why communicating with your lender is a good idea if you run into trouble paying. It could help if you ever need to send a Goodwill letter.
If you aren’t able to have the missed payment removed, don’t fret. It will be removed from your credit report eventually. It takes seven years.
In the meantime, you can focus on raising your credit score in other ways. As more and more time passes, the missed payment will be weighed less heavily in factoring in your credit score. Recent payment history is factored more heavily.
How To Avoid a Missed Payment
After you’ve taken care of the missed payment, brought your credit card account into good standing, and taken steps to repair your credit, the next logical step is to make sure you don’t miss a payment again. You can use a few strategies to ensure your credit card bill is paid on time each month.
Set up automatic payments
If you schedule automatic payments to be deducted from your checking account, even if it’s a minimum payment then you don’t have to even think about it. If you forget about your bill’s due date, it will still get paid. If automatic payments aren’t an option, consider setting up calendar reminders to keep on-time payments consistent.
Change your bill’s due date to coincide with other important bills
If you don’t want to set up autopay, for whatever reason, there are still steps you can take to make sure your credit card bill isn’t forgotten about. Minimizing the number of bill due dates to remember each month is one strategy.
If all of your bills are due on the same day, or if you schedule the credit card bill to be due the same day as rent or another vitally important bill, then you’ll stand a much greater chance of remembering to pay it.
Budget and get organized
While there are times that people run into financial trouble due to life circumstances outside of their control, a good deal of the time, finance problems all come down to a lack of organization. Out-of-control spending often comes down to not being organized with your budget.
If you don’t know what you’re spending, your budget, and what you can afford to spend, you can easily run into money trouble.
Make a detailed yet realistic budget. Make sure you’re putting enough money aside so that you’ll be able to pay your credit card bill each month.
If you realize that you aren’t making enough money to cover expenses and pay down all of your debts, then you’ll need to make a plan. This might mean debt settlement, or it might mean cutting back on expenses.
When you take the time to budget and make a plan, you’ll also want to get organized with the due dates for each of your bills. Write down the bill due dates on your calendar if you use one. If you don’t use a physical planner or calendar, then you can create a pop-up alert on your computer, tablet, or phone.
Wrapping it Up
If you’ve missed a credit card payment, there are steps you can take to minimize the damage to your credit score. A missed payment can bring your credit score down significantly. Depending on your credit history and current score, your score could go down by more than 100 points, bringing you into an entirely new credit category.
However, most credit card provider have a grace period of 30 days, and if you reach out to your creditor right away, you may be able to get a payment deferment.
If you have credit card debt and aren’t able to get a deferment and you don’t get your account back into good standing during that 30-day grace period, there are still ways to repair your credit.
You can build up a positive credit history in other ways, such as by making all of your other payments on time and having a low credit utilization rate. This will improve your score over time, as more recent payment history is given the most weight in factoring in your credit score.
Moving forward, be sure to get organized and have a solid budget so that you don’t run into trouble with missed payments again. Scheduling your monthly payments via autopay or arranging for your credit card bill to be due on the same date as other bills can be the best way to prevent you from forgetting to make payments. Even paying the minimum amount monthly will keep you out of trouble.
It’s not the end of the world if you’ve missed a credit card payment. There can be hefty consequences such as high interest rates and impact on your credit rating, but with proactivity and planning, you can minimize these consequences and prevent missed payments in the future.
