Even responsible borrowers can miss credit card payment or EMI. Sometimes, it gets difficult to manage all expenses, keep track of all due dates, etc., and suddenly, you realize that you have missed making the payment!
Now that you have missed the payment, it is important to know its impact. It is a minor default if the payments have been missed or delayed for 90 days or less. This will certainly lower your credit score tremendously, but it will affect you only temporarily. A major default happens when a person fails to make loan repayment even after 90 days. In this case, the individual’s account may also be put under the ‘non-performing assets’ category. Also, this type of credit report entry will prevent the person from getting easy future credits.
We can infer that in both cases, a borrower’s creditworthiness is hampered. However, making a payment soon after the due date can help you recover your credit bureau score.
What Will Happen If You Miss a Credit Card Payment?
Here is what can happen if you miss a credit card payment or EMI.
1. Late Fee
You might have to bear a late fee for missing the due date. Depending on the type of credit card you own and the lender charges, you must pay the late fee along with the amount due. However, some lenders do not levy a late fee if they receive the missed payment within three days. Also, you will pay more interest for the days you missed the payment. The exact amount of the late fee and other penalties can be viewed on your document or the lender’s website.
2. It could show on your credit report.
A missed payment may take 30 days or more to show on your credit report. However, if you make the payment quickly before ending those 30 days, your lender may choose not to report the same to the credit bureau. But if you miss paying the outstanding even after that period or pay a part of the outstanding balance, your credit report might show ‘late or missed payment’.
It is also important to know that your report will have more permanent marks if the late payment goes up to a default.
3. Lowers Credit Score
Have you considered what happens to your credit score if you miss a payment? You must know that if you miss the payment and it shows on your credit report, your credit score will drop depending on the number of missed days. However, you can rebuild your score by making future payments on time, reducing your credit utilization ratio, etc. Know more about credit improvement on Due Factory.
4. Your Interest Rates Might Increase
When the lender offers you a credit card or loan, the lenders check your credit health or payment history and decide your interest rate accordingly. Your interest rate remains the same if you have been a responsible borrower and have a great track record of managing repayments. But in case of late or missed payments, the lenders might see you as a risky borrower and increase your interest rate.
5. Loose Benefits
If your credit card came with some benefits or promotional offers like 0% interest for some time, missing a payment can take the offer away. For more details, look at your agreement copy and check the terms to see whether your offer is impacted.
6. Impacted Future Credit
Your future credit applications might be impacted if you miss credit card payments or EMIs and damage your score. It is better to wait for your credit score to rise again before applying for new credit. If you apply for credit now, you will be offered interest rates based on your credit score. Allowing your score to rise can fetch you better offers. Take help of Due Factory for credit building.
7. Recovery Calls
This can get embarrassing and stressful. The collection agents may call or visit your residence or workplace to collect the due amount. This can happen anytime after missing your due date.
Missed Payment: What To Do?
If you miss credit card payment or EMI, knowing what to do next is critical to ensuring that the impact caused is the lowest!
1. Connect With Your Lender
Please speak to your lender and inform them about the missed payment. Some lenders offer EMI-free periods. There might be other resolutions, too. You can consider calling/mailing the customer care team. The customer care team will allow you to make up for the loss. They will also suggest the necessary steps, detailing the payment process after the due date.
2. Make the Payment
Now that you have missed the due date do not hold it any further. When you realize you have missed the deadline, make the payment as soon as possible. Many credit card companies charge interest on the carried balance. Not paying it for a longer time will raise the overall amount due over time.
3. Set up Auto-Pay
If you miss paying the EMI once, you will likely miss it again! The best way to combat the same is to set up an auto-pay for future payments. You can set the automated payment option for covering the entire amount, a part of the amount, or just the minimum amount. However, be informed that the carried balance will attract interest. So, check your monthly statements and know the outstanding.
Wrapping up
Better to be safe than sorry, isn’t it? Rather than facing consequences of a late credit card payment or EMI, ensure to clear your dues on time. Set an alarm or a reminder to receive notification as the due date nears. Always have a few months of EMI funds available in the account from where EMI gets debited and don’t wait for the last day to add funds to this account. If you have repayment issues, connect with www.DueFactory.com, the credit repair partner, for expert advice.
Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
FAQs
1. What happens when I miss a credit card payment or EMI?
Ans: Missing the payment might reflect on your credit report, may bring your CIBIL score down, your ability to get credit may be hampered, you may have to bear a higher interest rate, etc., depending on how often you have missed a payment and when did you pay the outstanding after missing the due date.
2. Does missing a payment lower the credit score?
Ans: Each missed payment can bring your credit score down. Missing many credit card or EMI payments may substantially reduce your credit score. If you find it difficult to repay the amount on your credit card or EMI, you must seek advice from Due Factory for credit insights.
3. How long is my late payment going to remain on my credit report?
Ans: A late or missed payment can stay on the credit report for several years.
4. Will I bear a late fee for missing payments?
Ans: You might be charged a late fee on any late or missed payments. You will know the exact amount of the charges on the received documentation or the lender’s website.
5. How to ensure that I don’t miss a payment?
Ans: Setting an auto-pay and maintaining adequate balance well ahead of the EMI date will ensure that you don’t miss a payment. For more expert advice and your financial wellbeing, connect with Due Factory.