How to Pick Your Credit Back Up After Facing Credit Card Delinquency

March 4, 2020

Getting the hang of your personal finances can be difficult because of how customizable your choices are for how you’d like to handle your money. Maybe your focus is on saving? Or perhaps you’ve decided to take on creating an investment portfolio? Or, maybe, your focus is on recovering from financial hardships, like credit card delinquency.

Generally, there’s a lot of different balls to juggle when it comes to your financial decisions. Today, we’re tackling credit card delinquency to make your financial juggling a little easier to manage.

What is credit card delinquency?

Credit card delinquency is a distinction that broadly denotes a credit card user who has missed payments on their credit statement. While this answer rings true, it’s a short-hand version that needs to be broken down further.

To answer this question, it’s best to go back to basics. When you apply for and receive a credit card, you’re entering an agreement with your credit card provider. The loose details of this agreement are that they (your credit provider) will give you a line of credit that you can use at any time while the credit card is valid. Using the credit card puts you in debt with your provider and you (the credit card holder) are responsible for paying back what you owe plus any interest on your payment. The longer it takes you to pay back your balance in full, the more interest racks up on your account.

Generally, it’s a best practice to pay your credit back by each credit statement. Most credit card providers don’t require this but in the event they do, it’s a good idea not to spend more than you have on reserve in cash or more than you can feasibly pay back considering your interest rates.

Credit card delinquency becomes precarious because it can affect your credit score. Investopedia details how after missing a single payment, credit card holders are technically delinquent. However, grace is sometimes allowed if only one payment was missed. Should credit card holders miss more than one payment, they are then likely labeled “delinquent”. The more payments you miss, the more likely your delinquency will be reported to credit bureaus.

Ways to recover from delinquency

Delinquency can be scary not just because of how it might affect your credit score, but also because of how it usually is a symptom of a larger financial problem. Recovering from delinquency isn’t always as simple as paying off credit card debt. Here are some things to consider as you pick your credit back up post-delinquency status or if you’re nearing delinquency, too:

  • Assess what is causing you to miss payments on your credit card

Audit your spending to get a clearer picture of where your money is going. If you have a budget, assess whether you need to adjust how you’re allocating money. Find ways to carve out funds that will be dedicated to making your monthly credit card payments.

  • Audit your credit card statements

Comb through your credit card statements and make sure every purchase is your own. The Federal Trade Commission estimates 9 million Americans experience identity theft every year. With this staggering figure in mind, make sure there’s nothing fishy happening on your account and that every purchase was made by you.

  • Speak with your credit provider

Unbeknownst to many, you can speak with your credit card provider about options to settle your debt, changes to your interest rates, and more. You don’t just have to accept what is being handed to you. Instead, be financially savvy, speak to your provider, and advocate for yourself. While credit providers aren’t obligated to make any changes, speaking to your provider might yield surprising changes.

While these changes alone won’t lift your delinquency status, together they add up to efforts that can help you better manage your payments and credit card debt. Regardless of the choices you make, you want to be sure you’re in control of your finances rather than feeling hopeless about your debts. Consider implementing these changes to help you take charge of your delinquency status, today.

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