How can you prevent a delinquency from appearing on your credit report?

A payment that's been late for 30 days or more on your credit report can harm your credit score significantly and long-lastingly.

Understanding what causes delinquencies can aid in safeguarding your credit. CNBC Select provides insights on their operation and ways to prevent missed payments.

How delinquencies work

How delinquencies affect your credit

Late payments can significantly harm your credit score, as payment history is the most significant factor affecting your credit.

The longer you fall behind on your payments, the more your credit scores will be negatively impacted. Generally, there are four stages to delinquency: 30, 60, 90, and 180 days past due. At the 60-day mark, you may begin to receive calls and emails from your creditor asking for payment. After 90 days, you face a higher risk of having your account sent to collections.

Your debt may be charged off or sold to a debt collector after 180 days, which can negatively impact your credit score.

If an account becomes delinquent, it will remain on your credit report for seven years from the original date. Therefore, if an account became delinquent in January 2020 but was paid off in March 2020, it should fall off your credit report after January 2027.

If you made a payment in March 2020 but missed another payment a month later, it is likely that a new delinquency will be created with its own seven-year cycle. As a result, it should be removed from the January delinquency in April 2027.

Although the impact of delinquency lessens over time, it does not enhance your credibility as a borrower. Despite this, you may still be approved for loans or credit cards, but you will likely face higher interest rates, which will negatively affect your finances.

How to check your credit report for delinquencies

Monitoring your credit report regularly is crucial for maintaining control over your financial life. For example, if someone steals your personal information and opens a fraudulent account in your name, you can detect the suspicious activity and challenge it with the credit bureaus before it leads to a delinquency.

Consumers are entitled to receive a free credit report every 12 months from each credit bureau through AnnualCreditReport.com. Additionally, Experian, Equifax, and TransUnion provide free weekly online credit reports, allowing consumers to easily monitor their credit records.

A credit monitoring service is another convenient and user-friendly option. CreditWise® from Capital One was picked as the best overall free service by CNBC Select. It provides weekly VantageScore updates from TransUnion and real-time credit report updates from Experian and TransUnion. Signing up for this service does not require a Capital One credit card.

Another excellent option is Experian's Dark Web Scan and Credit Monitoring service. With this service, you'll receive real-time alerts about new hard inquiries and accounts opened in your name, as well as other changes to your Experian credit report. Additionally, you'll receive your updated FICO score and credit report every 30 days.

How to avoid late payments

To avoid delinquencies, it is best to avoid them in the first place. If you have multiple bills to pay each month, it can be challenging to keep track of them all. However, there are several strategies you can use to ensure you don't miss a payment.

• Automatic monthly withdrawals from your checking account are offered by most lenders and card issuers as a feature called autopay.
• To have more control over your payments, you can set reminders for your bills' due dates and pay manually. Many credit issuers or lenders offer this option through an online account, or you can use a budgeting app like Mint.
• You may want to adjust your payment due date to match your paycheck schedule or pay everything on the same day of the month to stay current with your bills.
• Contact your creditors immediately when you're worried about missing a payment during tough times. They may provide you with options, such as extending the payment deadline or enrolling you in a relief program.

Discussing possible solutions with your creditor may still be beneficial if you already have a delinquency. The next step is to prioritize paying off your debt and avoiding late payments in the future.

Bottom line

A delinquency on your credit report can occur if you are more than 30 days late on a bill from your creditor. This can have a significant impact on your credit, especially if you miss several payments in a row. To prevent this from happening, it is important to pay your bills on time. If you already have a delinquency on your record, it is crucial to pay down your debt and avoid any further missed payments.

Why trust CNBC Select?

Our mission at CNBC Select is to deliver top-notch service journalism and in-depth consumer advice to our readers, enabling them to make well-informed decisions with their money. Each credit guide we produce is the result of thorough reporting by our team of expert writers and editors, who possess extensive knowledge of credit monitoring products. At CNBC Select, we maintain the highest journalistic standards and ethics, and we earn a commission from affiliate partners on many offers and links. However, our content is created independently, without any input from our commercial team or external third parties. To learn more about our methodology and how we select the best credit monitoring products, please refer to our website.

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