What does delinquency mean in the credit report?

There is an essential requirement that will help you keep your credit cards active and in good standing. And when we say “in good condition” we mean that they are used according to the terms and conditions, that they have a stable balance and that they do not present late fees. What is this requirement? Pay at least the minimum before the due date to avoid a “Delinquency” note on your credit report.

Think that, if you pay after this date, the issuer will consider this payment late And, as if that were not enough, this momentary delinquency will affect your credit score, lowering or limiting your ability to get loans at attractive rates or a new card in the future.

Precisely in this case (for non-payment) It is known in the United States as delinquency and is reflected in your credit score.. But is there something else behind this term? Let’s see it.

What does delinquency mean in the credit report?

What does delinquency mean in the credit report?

When an account statement shows a note of delinquency or delinquency means you’ve been late on a credit card payment for 30 days or more. This account statement showing your delay is sent by the issuer or bank to the main credit bureaus from the country. Therefore, sooner or later it will be included in your credit report.

Once the delay exceeds 60 days, the issuer of your credit card will not be satisfied with having sent a note to the credit bureau. They may also decide to increase your interest rate as a penalty. This new rate will be in effect for at least six months. When you make six payments on time in a row, the bank will release you from the penalty and reapply your regular rate.

Note: Keep in mind that your credit card issuer may keep the penalty rate active for purchases you make with your credit card after you’ve made the cash payment or the minimum payment of the past due amount.

Let’s talk about “credit delinquency” and delinquency rates

Credit delinquency has an immediate effect on the rate, that is, what is known as delinquency rates or default rates. Doing a quick read on interest rates for delinquencies that are handled in the country will help you determine how the majority of families in the United States manage their debts.

How? Well, simply. If delinquency rates increase, this could be an indicator that people do not have enough money to pay their debts and, therefore, there may be a macroeconomic problem behind it or vice versa. For example, in the second quarter of 2019, the delinquency rates of credit cards handled by the country’s main commercial banks stood at an average of 2.56%, this According to Federal Reserve publications. This rate is slightly lower than that reported in the previous quarter, which was 2.58%, but at the same time, it is higher than that of the second quarter of 2018. (2.15%)

Consequences of delinquency in the credit report (and in your cards)

As we said before, a delinquency note on the credit report is not the only consequence of delinquency. Consumers can, and have the opportunity, to catch up sooner and thus recover their previous interest rate. Of course: this solution will not be economical. Think that, in order to carry it out, you will have to pay the entire past due balance plus the interest generated and, of course, the late charges that have accumulated in the account statement.

What happens if you forget to pay or have no way to do it? If the balance due on your credit card is not paid, eventually the bank or issuer will disable and cancel your credit card. That doesn’t happen from day one. In fact, passes after 180 days past due. If you get to this point, even if you pay the total balance plus interest and late fees – unfortunately – you will have lost your credit card.

Tip: If you have no way to pay the past due balance, contact the issuer immediately. Thus, you can request a plan that allows you to catch up with your payments. The credit counseling department will be more than happy to help you choose the best option.

How to eliminate a delinquency in the credit report?

The way to lessen the effects of a delinquency on your credit report is to improve it. How? Choosing to use good financial practices. Yes indeed. Keep in mind that this process is not quick and it is not easy. In fact, it takes some time.

And it is that, the only way to eliminate a delinquency in the credit report is if the information is inaccurate, incorrect or incomplete. Also if it cannot be verified with the issuer or if it has already exceeded the established time limit, which is about seven years. In cases like these, you have the right to submit a dispute to equifax, TransUnion Y experience to investigate the note and remove it.

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