Ever been late on a credit card?

[eljefino]

Yes, twice.

Once, at college, I got my very first credit card in my name. An AT&T Universal card that was both a CC and a long distance calling card, LOL. I signed up for the card from an on-campus recruiter. Got it, notified them of an address change to my parents house for the summer, then back to my campus address for the fall. I didn't use it much and didn't get statements if I didn't use it.

Well, suddenly, it stopped working. I called to see what was up and they said the mail was getting returned. Huh? Turns out my campus address did not match the USPS standard and was going to the city PO Box number blah blah instead of the campus mailbox. I straightened it out and paid the late fee. (Didn't know you could flirt your way out of them at the time.)

Next time around was a citi card. I paid it in full online on the day the statement closed. But then one more charge from that month, six bucks, snuck through so I had a balance. Wife lost her wallet so I cancelled all the cards and started over. Citibank locked me out of my online account "for my own good" LOL and it took weeks to set back up. They were mailing me PINs via snail mail, cards via snail mail, then limiting the amount I could pay. By the time I could finally see my balance another month had passed. Plus they used some scammy "two month averaging" way of computing interest so I paid twice, and they had a "minimum interest charge" of $5 for a $6 charge.

I eventually avenged them by opening a card with a $200 sign on bonus, doing exactly what was required, then closing that account... haha chumps.

 

[CKN]

I would stop by the bank and talk to a bank officer.

This is what it could do to someone in reality:
It knocked you from being a super-prime to a prime rated borrower. If you were buying a $400,000.00 home on a 30 year fixed with 10% down, that late payment makes the mortgage payment $55 more a month at today's rates.

If you have an over 800 credit score-and it's $6.00 it's inconsequential. Mine was $10.00ish-it was inconsequential. I had guys standing in line to loan me Money-at the most competitive rates. Then I yelled at them and all the "garbage fees" on the loan disappeared. I told them take them off or I am taking the loan to someone else.

The biggest pain was taking 10 minutes to write the explanation.

Are you a loan officer-or are you pontificating?
Because I speak from personal experience.

 

[Chris142]

I got a letter from tractor supply telling me to use my card or they were going to turn it off. I spent $20, forgot to pay it as I dont use cards and got hit with a $25 late fee.

I called and they wouldnt remove the fee so I paid $45 for $20 worth of stuff.

 

[John105]

Long story short 2 days past due date on amex and it set off a chain reaction. Forfeiture of rewards. Penalty interest rate. Late fee. They reversed everything when I called and this caused me to go through every acct and setup autopay last statement in full. Didn’t affect credit. What killed the credit was paying off the house. Have never recovered and it’s been 2 years. Was always 850 experian fico 9 and never since.

 

[Carmudgeon]

1) Stuff happens. Call the card issuer, ask nicely, and being an anomaly, they might even waive the fee, if not amend the credit report.

2) Your credit score will take a temporary hit, but it will recover. Credit scores are fluid, and change continually; your overall history counts for far more than an occasional miss. Habitually late, or non-payers are those who suffer the highest penalties. And unless you're planning to apply for a loan in the near future, it will have no impact.

3) Credit scores are one factor, not the sole factor, for lenders, especially for large loans like mortgages. People make way too much of their credit score, when other factors, like income, assets, employment stability, loan amount and other factors are more important. And even for those on the borderline between loan tiers due to credit scores, there are ways to address that.

Ironically, what occurred with the OP is precisely what credit scores are designed to measure -- whether you pay your bills, and pay them on time, which is the most heavily weighted in the formulas.

Contrary to popular belief, a credit score has nothing to do with income, wealth, or anything else some may treat as a pseudo-social credit score. And they're certainly not that. They are a measure of how responsibly one uses credit. Nothing more, nothing less. Even if they've been co-opted by some to serve other purposes.

Take it from someone who was in the business in a past life.

 

[paulri]

This is one reason why I always set up my cc to withdraw the minimum payment each month automatically (and occasionally, more than the minimum payment). That way, if I forget to pay the entire bill off, at least I know some of it has been paid, and I won't incur any late fees.

Years ago, I put my check (to pay my cc) in my car under my seat. Forgot about it for a month, then realized it was there. I called them and they went ahead and took away the fee, it was my first time. As others are saying, it is worth it to call them and ask. All they can do is say no.

 

[Pablo]

1) Stuff happens. Call the card issuer, ask nicely, and being an anomaly, they might even waive the fee, if not amend the credit report.

2) Your credit score will take a temporary hit, but it will recover. Credit scores are fluid, and change continually; your overall history counts for far more than an occasional miss. Habitually late, or non-payers are those who suffer the highest penalties. And unless you're planning to apply for a loan in the near future, it will have no impact.

3) Credit scores are one factor, not the sole factor, for lenders, especially for large loans like mortgages. People make way too much of their credit score, when other factors, like income, assets, employment stability, loan amount and other factors are more important. And even for those on the borderline between loan tiers due to credit scores, there are ways to address that.

Ironically, what occurred with the OP is precisely what credit scores are designed to measure -- whether you pay your bills, and pay them on time, which is the most heavily weighted in the formulas.

Contrary to popular belief, a credit score has nothing to do with income, wealth, or anything else some may treat as a pseudo-social credit score. And they're certainly not that. They are a measure of how responsibly one uses credit. Nothing more, nothing less. Even if they've been co-opted by some to serve other purposes.

Take it from someone who was in the business in a past life.

Mostly right. Super right about purpose. But does weigh debt and income.

 

[Carmudgeon]

Mostly right. Super right about purpose. But does weigh debt and income.

Debt, certainly. Utilization, another among the many ratios.

Income, assets. No. At least not directly.

A person who makes $50k annually, rents, scrapes by, and consistently pays off their bills on time will have a higher credit score than someone who makes $500k, lives in a McMansion, makes use of the many credit lines they probably have, but doesn't pay their bills. The latter might have an much easier time paying their bills, but the fact that they don't is what's being evaluated. People would be surprised at what shaky, if not rotten, financial lives some outwardly "wealthy" people have.

You will not see someone's income, or assets, appear on a tri-merge report, just their credit history. Another fun fact -- of the three scores from the major credit bureaus, lenders will usually discard the high and low, and consider the one in between.

https://www.myfico.com/credit-education/whats-in-your-credit-score

https://www.experian.com/blogs/ask-...score-basics/what-affects-your-credit-scores/

And for the OP, note the #3 factor, length of credit history. One late payment on a card held for 30 years is a blip.

https://www.myfico.com/credit-education/credit-scores/whats-not-in-your-credit-score

https://www.experian.com/blogs/ask-...ion/score-basics/what-is-a-good-credit-score/

What Information Credit Scores Do Not Consider​

FICO and VantageScore do not consider the following information when calculating credit scores:

• Your race, color, religion, national origin, sex or marital status. (U.S. law prohibits credit scoring formulas from considering these facts, as well as any receipt of public assistance or the exercise of any consumer right under the Consumer Credit Protection Act.)
• Your age.
• Your salary, occupation, title, employer, date employed or employment history. (Keep in mind, however, that lenders may consider this information in making their overall approval decisions.)
• Where you live.
• Soft inquiries. Soft inquiries are usually initiated by others, like companies making promotional offers of credit or your lender conducting periodic reviews of your existing credit accounts. Soft inquiries also occur when you check your own credit report or when you use credit monitoring services from companies like Experian. These inquiries do not impact your credit scores.

If you're talking about the overall application, yes, income is certainly one of the primary factors, But for credit scoring, no.

 

[Pablo]

Debt, certainly. Utilization, another among the many ratios.

Income, assets. No. At least not directly.

A person who makes $50k annually, rents, scrapes by, and consistently pays off their bills on time will have a higher credit score than someone who makes $500k, lives in a McMansion, makes use of the many credit lines they probably have, but doesn't pay their bills. The latter might have an much easier time paying their bills, but the fact that they don't is what's being evaluated. People would be surprised at what shaky, if not rotten, financial lives some outwardly "wealthy" people have.

You will not see someone's income, or assets, appear on a tri-merge report, just their credit history. Another fun fact -- of the three scores from the major credit bureaus, lenders will usually discard the high and low, and consider the one in between.

https://www.myfico.com/credit-education/whats-in-your-credit-score

https://www.experian.com/blogs/ask-...score-basics/what-affects-your-credit-scores/

And for the OP, note the #3 factor, length of credit history. One late payment on a card held for 30 years is a blip.

https://www.myfico.com/credit-education/credit-scores/whats-not-in-your-credit-score

https://www.experian.com/blogs/ask-...ion/score-basics/what-is-a-good-credit-score/



If you're talking about the overall application, yes, income is certainly one of the primary factors, But for credit scoring, no.

How is credit LIMIT set by card companies? Sure credit history - but I was under the impression income (not just job salary) is considered. Therefore when the credit bureaus calculate utilization income is in the equation.

 

[Jdeere562]

How close is Credit Karma score compared to actual?

I bought a new SUV in 2018. Wanted to write a check, so the dealer had to run my credit before accepting the check.
They showed me the report of my score being 840. Credit Karma only listed it about 820.
I thought that was a large variation.

 

[Pablo]

How close is Credit Karma score compared to actual?

I bought a new SUV in 2018. Wanted to write a check, so the dealer had to run my credit before accepting the check.
They showed me the report of my score being 840. Credit Karma only listed it about 820.
I thought that was a large variation.

Tiny.

 

[Carmudgeon]

How is credit LIMIT set by card companies? Sure credit history - but I was under the impression income (not just job salary) is considered. Therefore when the credit bureaus calculate utilization income is in the equation.

That is determined by the bank/issuer who ask for your income when you apply for the card. The credit bureaus and their scoring are independent of the lenders.

They're the lender, using your income (stated, it should be noted), and other information they've gleaned, including credit score, to determine their risk and how much they are willing to forward. But as you can surmise by how easy it is to get credit if you're not a deadbeat, it's not nearly as rigorous a process, being unsecured credit, vs. other types of loans that require some sort of backing, and insurance, like with your house and cars.

 

[CKN]

How is credit LIMIT set by card companies? Sure credit history - but I was under the impression income (not just job salary) is considered. Therefore when the credit bureaus calculate utilization income is in the equation.

We have two Credit Cards with one bank. I keep trying to get them to raise the limit on the CostCo Card. They will not do it. It irks me when we book all this travel-the balance goes WAY UP (of course paid in full the next month) and then my credit score (Fico) goes down by 50 points.
Their argument is that we have two cards with them (true) and the total potential debt on both cards is what they want to give me.

They only reason I put up with this is that we are Costco members-and the rebates every February are substantial on the travel end of it.

 

[paulri]

Why is that the case? Does your credit score go down because the available credit has decreased? I remember reading somewhere that closing out cc accounts that you no longer use, won't help your credit score, because the percent of credit that you are actually using will increase--or something like that.

We have two Credit Cards with one bank. I keep trying to get them to raise the limit on the CostCo Card. They will not do it. It irks me when we book all this travel-the balance goes WAY UP (of course paid in full the next month) and then my credit score (Fico) goes down by 50 points.
Their argument is that we have two cards with them (true) and the total potential debt on both cards is what they want to give me.

They only reason I put up with this is that we are Costco members-and the rebates every February are substantial on the travel end of it.

 

[CKN]

Why is that the case? Does your credit score go down because the available credit has decreased? I remember reading somewhere that closing out cc accounts that you no longer use, won't help your credit score, because the percent of credit that you are actually using will increase--or something like that.

Yes.......
I would rather them raise the credit limit-than for me to get additional credit card (issued by another bank/credit union)-which I could easily do.

 

[Pablo]

That is determined by the bank/issuer who ask for your income when you apply for the card. The credit bureaus and their scoring are independent of the lenders.

They're the lender, using your income (stated, it should be noted), and other information they've gleaned, including credit score, to determine their risk and how much they are willing to forward. But as you can surmise by how easy it is to get credit if you're not a deadbeat, it's not nearly as rigorous a process, being unsecured credit, vs. other types of loans that require some sort of backing, and insurance, like with your house and cars.

Yes and I was clear on that. Lender sets limit.

And they use income.

Bureau watches the ratio of use, and yes it is a ratio - denominator determined by income.

We agree bureau doesn't consider the ability of said income to pay down the "used" part of the ratio (numerator) - which can be aggravating to me and now I see others in this thread.

 

[CarLuver]

went on my citibank acct and checked my fico score. its 825 , but last update was 7/23 . i am curious what it will be with the next update. i don't intend to borrow any money in the near future , but its just irritating how this happened .

 

[hrv]

Nope.. I pay them off as soon as they get posted...

 

[Carmudgeon]

Yes and I was clear on that. Lender sets limit.

And they use income.

Bureau watches the ratio of use, and yes it is a ratio - denominator determined by income.

We agree bureau doesn't consider the ability of said income to pay down the "used" part of the ratio (numerator) - which can be aggravating to me and now I see others in this thread.

We're both on the same page.

Yes, one's income does help determine their credit limits, and ultimately affects their utilization ratio.

However, that's only half the equation, and leaves out the borrower's own fiscal behavior, and how/how much of their credit they choose to utilize, something that affects their creditworthiness much more directly than how much they make.

Someone with higher means can obviously afford to buy that 640bhp 911 Turbo S, which offers much higher performance potential than someone who can only afford a 122bhp Nissan Versa.

But it would make no difference to the officer who catches a speeder in either car, because it was their heaviness on the throttle that got them in trouble, not the amount of horsepower their cars packed. That would not be an acceptable excuse to the law, or a bank. It's not the car, per se, it is the driver's behavior that's under scrutiny.

Those who may plainly believe that a higher income equates to a better score will be disappointed to learn it does not -- it's contingent on their credit usage, which contributes to the score, but only a part of it. High earners can have rotten credit scores, and vice versa. I saw those files in real life.

It's not perfect, by any means, in conception or practice, but those who don't know the rules of the game can't ever hope to play it well if they don't at least make an effort to understand them. Many do not. That's the lesson that should be taken away, and they are readily available like in the links cited above.

 

[SaberOne]

I've had instances of being late in the past, particularly when I was younger. Paying the fee is always a bit painful, but my best strategy now is to reduce my overall use of credit cards. Given that we live in a credit-driven world, I'm always worried about how it affects my credit score, which I prefer to call my 'debt score' because it feels more accurate.