Missed Payments

What happens if you miss or are unable to make your credit card payment? Even if it’s just one payment, you may be charged a late fee (usually around $25 to $35), which could be added to your balance and accumulate interest like the rest of your debt. Your credit card company can also report the delinquency to the three major credit bureaus (creating a negative mark on your credit). After multiple missed payments, some card issuers may also adjust your interest rate.

If circumstances arise that make it difficult to you to keep up with your credit card payments, you should reach out to your card issuer immediately and explain your situation. You may be able to negotiate a payment plan. You might also want to meet with a credit counselor at your financial institution or bank for additional strategies.

Credit Score

Failing to pay your credit card debt can have a significant impact on your credit score. Missing payments or failing to pay at all can quickly damage your credit score because 35% of your score* is based on your payment history. With a debt in collections, your credit score could go down.

How much you owe may also factor into how the debt affects your credit score. For example, if you’re using a large percentage of your total credit limit (i.e., you have $950 in charges on a card with a $1,000 credit limit), your credit score may take a hit, according to myFICO.com. That’s because it can look like you’re overextended—that you may not have the money to pay off your bill. Read more about credit scores.

*Source: www.myFICO.com

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