How Delinquent Accounts Affect Your Credit?

The world would have been a perfect place if you can open several credit card accounts with no need to pay for anything you spend. Unfortunately, this is definitely not the case. While many credit card users know that owning a card comes with great responsibility, there are others who don’t seem to understand the obligations involved.

Whether you have plans to open a credit card account or you already have one or two at the moment, it is imperative that you are familiar with delinquent accounts and their effects on your credit.

What are Delinquent Accounts?

In the most basic sense, delinquent accounts are accounts that are past due, usually 30 days after missing the minimum payment at least. Creditors often don’t report it until you missed two successive payments, particularly for people with a clean account and flawless payment history. It acts like some kind of buffer period that give credit card holders an opportunity of getting back on track with their payments with no need to incur any substantial negative effects to their credit.

Potential Effects:

A delinquent account can have significantly negative effects on your loan and credit privileges since failure to make minimum payments can make viewers see you as someone irresponsible when it comes to loans.

Among the most substantial effects of a delinquent account include the following:

• Damage to credit score of up to 125 points at times
• Possible monetary penalties that could be in the form of higher interest rates and fees
• Can remain on the credit report of the borrower for up to 7 years
• Debt collectors taking legal action against the credit card holder
• Revoked or suspended charging privileges

How to Stop Delinquency

Making payments is the easiest and most obvious way to prevent delinquency from progressing even further. But, it is imperative to understand the effects of such payments to your present situation. You will stay at your present delinquency level if you make a single minimum payment. But, you have to remember that payments that are lower than the set minimum amount won’t affect your delinquency level at all.

Your account is going to be current after you pay off the total compromised minimum payments. After on-time payments for a period of 6 months, you can ask for a deduction of your interest rate that probably spiked because of the payments you missed.

How to Remove Delinquent Accounts from Credit Reports?

It is part of your responsibility to constantly work to eliminate the harmful entries reported on your credit history. Good thing there are a few steps that can be taken for mitigating past harms to ensure that you will be able to continue using your credit card in the future. These include the following:

• Write a pay for delete offer.
• Send a goodwill offer.
• Be patient.

If there is false data on the credit report, you could send a credit report dispute with proof via mail or online. The credit bureau will investigate and remove it once proven that it was wrongfully reported.