If you learn only one thing about credit, let it be this: Pay your bills on time.
Fail to do so, and you’ll have trouble getting loans or credit cards. Think of it this way: When you apply for a job, your potential employer looks at your resume and watches out for any indication you may not be a reliable employee. When you apply for a loan, your potential lender looks at your credit reports. Having a few (or many) credit card delinquencies on your credit report is like adding a section to your resume documenting all the times you were late to work or called in sick — no one would want to hire you based on that information.
If you want to check your credit to see how late payments are affecting you, the Credit Report Card will update two of your credit scores every month and grade you on the major credit scoring factors like payment history.
What Constitutes Delinquency?
Payment history has the biggest impact on your credit scores. If you have great credit, a single late payment can result in a 100-point drop in scores. But how late does your payment have to be before you’re considered delinquent?
Paying a credit card bill even a day late could turn into a bit of a mess: You could get hit with late fees, your issuer may raise your interest rate, and there could be other terms of your credit card agreement that allow the issuer to penalize you for missing a due date. The longer you go without taking care of the bill, the more you’ll end up paying in interest, but the 30-day mark is when things really start to unravel.
Once an entire billing cycle goes by and you haven’t paid your previous bill, a 30-day-delinquency code will appear on your credit reports. If you miss a third payment, you’ll be 60 days past due. A fourth unpaid credit card bill gets you to 90 days delinquent, at which point you enter the territory of serious delinquency.
The Impact of Tardiness
For the next seven years after those missed payments are first reported, potential lenders will see delinquencies on your credit reports and take that information into consideration as they decide whether to grant you a loan or issue you a credit card. (You can pull your free annual credit reports to check for delinquencies.)
It may feel like the 30-day-delinquency note on your report is haunting you for a long time, but the good news is that credit information has less of an impact on your scores as it ages.
Still, you want a delinquency on your credit report about as much as you want “always late” stamped on your forehead during a job interview, which is to say you do not want a delinquency on your credit report. Know when your billing cycles end and when you need to pay the credit card company. Even if you can’t pay in full (which is a good habit to develop), it’s much better to send something on time than nothing at all. Setting up automatic payments for your credit cards can be a great way to avoid this issue, but you’ll still want to confirm that the transaction goes through each month.
More on Credit Reports and Credit Scores:
- The Credit.com Credit Score Learning Center
- What’s a Good Credit Score?
- How to Get Your Free Annual Credit Report
- How Do I Dispute an Error on My Credit Report?
- What’s a Bad Credit Score?
- How Credit Impacts Your Day-to-Day Life