No one wants to fall behind on credit card payments, but life happens. Living expenses creep up. Emergencies happen. Realizing you missed a payment can be nerve-racking, but catching up gets more complicated the longer you wait.
Knowing how to bounce back from mistakes is an important part of managing your credit. As part of National Credit Education Month, myFICO helps you explore some options to catch up on your past due credit card payments.
For more credit education, visit myFICO’s blog at https://www.myfico.com/credit-education/blog
Review your budget and spending
Comb through your budget for areas where you can significantly reduce spending. You may be able to free up enough money to make your outstanding payment. Review your previous bank statements too, to help you catch unbudgeted spending. Here are a few expenses you can consider cutting:
- Streaming services
- Data storage
- Snacks
- Delivery memberships
- Unused gym membership
- Food delivery
If you can't squeeze any more money from your budget and your minimum payment is more than you can afford, you may want to revisit your budget or explore other options to help you catch up with your missed payments. In any case, you should act quickly—your minimum payment increases each month you're late. After six missed payments, your balance will be charged-off and due in full.
Make some extra money
Consider picking up a side gig in your spare time. For example, food or grocery delivery is an option if you have reliable transportation. Many pay an hourly wage plus tips from customers.
Offering services is another option. Babysitting, dog walking, tutoring, organizing, and errand running are examples of ways you can make some extra cash. You may have family, friends, and neighbors who need your services or who can refer you to others.
Get paid sooner
If your next due date is right before payday, early direct deposit may help you avoid a missed payment. With early direct deposit, your bank adds eligible deposits to your account two days before the check actually clears. For instance, you normally get paid on Friday, your direct deposit will be available on Wednesday. Check with your bank for details on enrollment.
Early direct deposit won't help in every situation, but if having your paycheck a couple days early will get you back on track, it's worth exploring.
Consolidate balances
By consolidating past due balances, you can bring your accounts current and possibly simplify your balances, making them easier to repay. Options for consolidating your balances include balance transfer credit card, debt consolidation loan, or home equity loan.
Be mindful of timing if you're considering a balance transfer since the transfer can take several days or weeks to finalize. If you're near six months past due, your account could be charged-off before the transfer is complete.
Contact your creditors
Reach out to your credit card’s customer service to let them know your current challenges. Ask for options to help you get caught up again. You may be able to have fees waived, your monthly payment reduced, or have payments suspended for a few months.
Working with a third-party credit counseling agency is an option, but you'll have to stop using all your credit cards while you're in the program. The benefit is that you keep your account from becoming more delinquent, prevent additional late fees, and stop calls and text messages from the collections department.
Timing is critical
If you've missed a couple of payments, you still have time to catch up and minimize the negative impact to your FICO® Score. Catching up won't remove the previous late payments from your credit record, but it may allow you to stabilize and start rebuilding your credit.
Once you're back on track, aim to pay your balance in full each month. That way you'll have one less payment to worry about when your finances are stretched.
About myFICO
Get your FICO® Score from the people that make the FICO Scores, for free. Plus, free Equifax credit monitoring and a free Equifax credit report every month. No credit card required. For more information, visit https://www.myfico.com/products/fico-free-plan-a
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Contacts
Elizabeth Warren
ElizabethWarren@fico.com
