Delinquent Account

What is 'Delinquent Account'

A credit card balance on which a consumer has failed to make at least the minimum monthly payment by the due date. A delinquent account that is 30 days past due will spur the credit card company to start contacting the consumer about bringing the account current. If the account becomes 60 days delinquent, the contact will become more frequent and less pleasant. Sometimes creditors will work with delinquent customers in the early stages of delinquency to negotiate different repayment terms that will help the customer bring the account current.

BREAKING DOWN 'Delinquent Account'

If you become delinquent on even one credit card account that is reported to the credit agencies, your credit score may take a serious hit: expect your score to drop 50 to 100 points, and the higher your score is to start with, the more it will usually fall.

A 50- to 100-point drop could be enough to put you in a lower category of credit worthiness. You might go from being considered a super-prime or excellent borrower, with a score of 740, to being considered merely a near-prime or acceptable borrower, with a score of 660. Instead of qualifying for the best interest rates on new loans, you’ll qualify for one of the higher rates offered to riskier borrowers, and you may no longer qualify for the best rewards credit cards.

Because credit scoring formulas look at each individual’s overall credit picture when determining a score, there’s no way to know ahead of time exactly how many points you’ll lose from a delinquent account. However, since payment history is one of the most important components of your credit score, a late payment will always have a negative impact. In addition, a recent delinquent account will have a more significant impact on your score than an older delinquent account that you have since brought current.

Delinquent credit card accounts that remain unpaid will eventually get sold to a third-party debt collector. You’ll have to deal with these debt collectors, who have a reputation for being less pleasant to interact with than the credit card companies you originally owed the debt to. At this point, the debt will be reported as charged off on your credit report, which will further harm your credit score.