Everyone knows that falling behind on your bills will have a negative impact on your credit score, but most people don’t exactly have a clear understanding of how that impact takes place over the course of time.
In some situations, you might be able to work with a lender or creditor to recover from delinquent status before any damage is done to your credit score. However, there is a fine line that you don’t want to cross if you have any intentions of keeping your credit report clean.
In order to help you understand exactly what happens as an account progresses deeper and deeper into delinquent status, let’s take a walk through a hypothetical delinquency timeline.
30 Days Delinquent
While most creditors don’t get worked up over an account that is 29 days behind, their tune changes dramatically once an account crosses the 30-day mark. At this point, the typical creditor will begin to send written reminders and make phone calls asking about the account.
In most cases, creditors will give you the opportunity to get current before taking the step of reporting the delinquency to the credit bureaus. And even if a 30-day delinquency does show up on your credit report, it is still a very salvageable situation if you get back on track quickly.
60 Days Delinquent
When a delinquency crosses over into 60-day territory, lenders will begin to get a little more urgent in their letters and phone calls. At this point, just about any type of debt is going to be reported to the credit bureaus.
But while 60 days behind is much more serious than 30 days, there are still ways to get out and recover before too much damage is done to your credit score. It is critical here to have a plan in place and work with your creditor to make things right.
90 Days Delinquent
Your lender will likely be willing to work with you to create a way out all the way up until a delinquency hits the 90-day mark. At that point, they are going to start considering the debt uncollectible and will likely forward it to a collection agency.
Once your account hits collections status, you are going to see major damage to your credit score almost instantly. It will take a significant effort to work your way back from this type of situation, so it might be time to consult with a credit counselor.
120 Days Delinquent
When an account falls to four months behind, just about everyone involved is going to give up on ever collecting anything. In cases involving real estate or vehicles, you are likely going to see foreclosures and repossessions at this point in the timeline.
Having a foreclosure or repossession on your credit report is almost as serious as filing for bankruptcy, so you are going to be in desperate need of some outside help at this point if you ever want to see your score recover.
No matter how far you fall behind on your obligations, there is always a way out of the mess. However, you have to first be honest with yourself, and then you need to be willing to ask for help. If you can do that, you can find your way back to a respectable credit score.