Here’s What Happens When You Miss A Credit Card Payment – And How It Affects Your Credit

Automotive Finance, Credit Education, Ride Time

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delayed credit card payments

If you’re looking to rebuild your credit, making timely payments on credit accounts such as credit cards is one of the most important things that you can do. By paying off your credit cards each month, you can avoid high APRs, and ensure that you are building up your credit score.

A good credit score is often required to get things like an auto loan, or a home loan, so it is always in your best interest to make your credit card payments on-time every month.

But what happens if you forget a credit card payment, or can’t make your payment for the month? In this article, we’ll explore what happens when you miss your payment, and how this affects your credit.

1. You’ll Get Hit With A Late Fee

The first thing that will happen when you miss a credit card payment is that you will be hit with a late fee for nonpayment. This usually ranges from $15-$35, and is charged every month you miss a payment, or you pay less than your monthly minimum balance. The late fee can also increase if you miss more than one payment.

If you manage to pay your card’s statement balance quickly, you might be able to get this fee refunded, but this varies based on your issuing card company.

2. Interest Will Start To Build On Your Late Payment

Interest will continue to be charged in full on your delinquent payment, and on any other past-due payments on your account. Because credit cards often have 20-25% APRs or higher, this can lead to a serious buildup of credit card debt.

3. Your Interest Rate May Rise

If your payment is delinquent for more than 60 days, your creditor may choose to penalize you with “penalty” interest rate. Your interest rate will increase to the highest allowable rate for your credit card.

This makes it harder to carry a large balance, and extends the amount of time it will take to pay off your balance – resulting in a higher overall cost of paying down your debt.

This penalty must be removed after six months of on-time payments, however. If your account is in good standing, you may get your previous APR back, depending on your credit account terms.

4. Your Missed Payment Will Appear On Your Credit Score

Late payments are added to your credit report if they are more than 30 days past their due date. This entry will continue to be updated in 30-day increments, until it reaches a maximum age of 180 days. At this point, your account is “charged-off” which can result in further damage to your credit score.

This entry will remain for up to seven years, and continue to affect your credit. Because of this, it’s best to avoid any missed payments.

5. Your Credit Score Will Drop

On-time payments make up 35% of your FICO credit score. That means that paying your credit accounts on time is the single biggest factor that can raise – or lower – your credit score.

If you fail to make a payment on time, your credit score will drop. How much your credit drops by depends on your previous credit history. In general, the higher your score is, the more a late payment will affect your credit.

Timely Payments – The Best Way To Rebuild Your Credit Score!

If you are interested in buying a car and need an auto loan, it’s a good idea to build your credit score up as much as possible for better loan terms. That means you should do your best to make payments on all of your credit accounts, and stay in good financial standing.

But if you need a car and don’t have great credit, or are in the process of rebuilding your finances, you’re in luck! Ride Time offers reasonable rates on high-quality used cars, and we work with a network of 15+ specialized lenders to help Canadians with subpar credit. Browse our cars now, and find a vehicle that’s right for you today!


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