You might not get a dramatic knock on the door from your credit card lenders for missing a payment, but it could have a drastic effect on your credit score and future lending capabilities. Knowing how a late credit card payment can affect your credit score can help you avoid problems later. Here are few things that you need to know when it comes to late payments affecting your credit score.
It can reflect on your credit report
Missing a payment can affect your credit score and your credit report which lenders look at to approve you for other credit cards or loans. A late payment is when you missed your payment by more than 14 days. This slight error can be listed on your credit report and stay there for up to 2 years. This can also affect the good report sheet that you could have been building up and possibly hinder your chances of approval.
Defaulting on a payment
Although missing a payment by a few days may not attract a hefty fee, defaulting on a payment by more than 60 days can result in you being slapped with a $150 fee or more. This could stay on your credit report for up to 5 years. Always keep in mind that your credit report will be used to prove your credibility in keeping financial commitments. Defaults are worse than missing a payment because it stays on your credit report for longer.
Credit card infringement
If your credit card payment is more than 60 days late, your lender is likely to send you a written notice to the address you have listed with them. Failing to respond to their notice in the next 6 months, whether you have read the notice or not, can result in your lender listing this as an infringement on your credit report which can stay on your report for up to 7 years. This is why it is vital that you keep your address up to date and check for errors so that you can quickly contact your lender to have this rectified.
What to do if you cannot afford your credit card bill?
Dealing with your credit card payments as soon as possible can save you from major issues later on. However, if you find yourself unable to meet your credit card payment for the month, it is advisable to contact your lender as soon as possible to find a way moving forward. This can also prevent your credit report being listed with an overdue payment.
If contacted in advance, your lender will be able to provide you with a payment plan that is reasonable until the amount that is owed is paid. You could also consider using free financial counsellors who can help you map your way going forward.