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What Is A Delinquent Credit Card Account And What Happens To It?

 | Jul 15,2007


You've fallen behind on a credit card payment. You've received a few letters, maybe even a phone call. However, you haven't even been able to make a minimum payment. You know the credit card company's not happy with you. What will they do to you?

They will report your lack of responsibility to anyone else considering giving you credit and send a collection agency after you. Once your credit card becomes delinquent and it's reported on your credit score. If even a credit card company offers you credit again, you will have to pay more for anything that you want.

Okay, you messed up. The important thing now is how you respond.

How To React

The first thing you have to do is take a breath. Okay? Good, now call the credit card company. Tell the representative you want take care of your debt and you want to clean up your credit.

What you want to do is work out a deal with the credit card company. They are not required to report your credit history - it's their option. So, you want to ask them to remove the negative information.

The Negotiation

In exchange, you must offer either to pay off what you owe in one lump payment or to begin making monthly payments. This part is negotiable. Often companies will settle for anywhere from 10 to 30 percent less than the total owed.

If the company will not immediately remove the negative information from your credit report, then ask them to do so once you've repaid the debt. This is the key goal of your negotiation - cleaning up your credit report.

Worst Case Scenario

Your problem will be more difficult if the credit card company has sent your delinquent account to a collection agency. Collection agencies often use aggressive tactics and might not be as amiable in negotiating. Still, you want to use the same approach - be respectful, don't lose your cool, stay focused on your message - you want to fix your credit. They also will usually settle for less than the full amount.

The worst thing you can do is ignore the problem. This route will definitely make things worse. Communicating with the credit card company is the first step in rebuilding your credit and your financial future.

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