Credit Report Delinquencies: Everything You Need To Know
Delinquent credit issues can really drag down your credit score. We’ll explain what a credit delinquency is, how long until an account is considered delinquent, how long a delinquent account stays on your credit report, and how you can fix these negative remarks and rebuild your credit score.
What is a delinquency on a credit report?
A delinquency is another name for a late payment. A serious delinquency on your credit report means you’ve been so late in paying a bill that the creditor has reported your account to the credit bureaus as past due.
In some cases, the bill may be sent to collections meaning the debt has been sold to a third party. The original debtor removes it from their books, and it’s up to the third party to collect on the debt if possible, and any money recovered belongs to that third party.
Credit card delinquency timeline
Technically, a bill is late if the payment hasn’t been made by midnight on the due date. Most creditors offer a grace period, if you make the payment within the grace period, there are no late fees, and the account won’t be reported as late to the credit bureaus. A standard grace period is ten days but is always at the discretion of the creditor.
Generally, late payments won’t be reported until you’ve missed a complete billing cycle, usually 30 days. At this point, most creditors report the account as late and charge a late fee. The late payment will now appear on your credit report as a delinquency and lower your score.
After the account is 60 days behind, the creditor will take steps to collect the money, including sending collection letters and emails and making phone calls. Additional late fees may be charged, and the account will be reported as 60 days delinquent.
Once the account is 90-120 days past due, the creditor may send a certified letter demanding payment. If the account is for a home or auto loan, the creditor may start the process of foreclosure or repossession, taking your home or vehicle. In the case of a credit card, the issuer may cancel the card, close the account, and sell the debt to a collection agency.
After a debt is 180 days past due, in most cases, it will be sent to a debt collector, and there will be no way to bring the account back to good standing.
Fixing serious delinquencies on a credit report
Payment history is the most significant factor in your credit score, making up 35% of it, so delinquencies will badly damage your credit score. A delinquency can drop your credit score as much as 90-110 points which is devastating even if your score had been in the Excellent range. And the delinquency will stay on your report for seven years.
If you suspect there are delinquencies on your credit report, you can request copies here. If the delinquencies are legitimate, you can call, email, or write the creditor and ask that it be removed from your account and the information updated with the credit bureaus.
Before doing so, bring your account up to date and be prepared to have a very good reason for your late payment, i.e., a major illness or a hospitalization. This may or may not work, but it’s worth a try and doesn’t cost you anything. This step must be taken before the debt is sold to a third party. At that point, the original creditor has no ability to remove the delinquency. And once the delinquency is two years old, it cannot be removed from your credit report.
If the delinquency is not correct, you can contact the reporting bureau and the creditor and ask them to remove it. You will need to provide proof that the information is incorrect.
If you can’t do anything about the delinquency, it’s time to focus on improving your score in other ways. Upwardli can help build your credit score or improve it. We can also connect you with financial service providers who understand not everyone has things like perfect credit, a Social Security number, or ITIN. If your credit score could use some work, Upwardli is here to help!
