Ever been late on a credit card?

[John105]

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.

Again, if one is concerned about credit score, don't pay off debt. My Experian FICO 9 was 850 for a very long time. 2 years ago I paid off the house, and I applied for a credit card to get $200 after spending $500. It went from 850 to 80x, and has never recovered. But then again, who cares about that number? Less debt is better, whether FICO likes it or not.

As far as credit limits, my Chase Amazon is $31k. I'd have to be an outright moron to use it up to its limit. For what, the 5% rewards on amazon? What do you mean with the 911 Turbo S example? I'd say a person who buys that car, likes driving an automatic, but that says nothing about their credit. Even with the 997, they'd have to forgo the S to get a manual.

Going back to the main topic, life happens, we can't remember everything, and the damage when paying late, is disproportionate, punishment doesn't fit the crime (forfeiting rewards, penalty interest, etc., for missing due date, it can be paid 1 day late and before next statement and the above still happens). Don't let it happen. Set all credit cards to autopay statement balance in full.

 

[John105]

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

You don't even wait for a statement?

 

[hrv]

You don't even wait for a statement?

Nope... Once it gets posted online I pay it off in full....I use my card to get airline points and it works great for me....

 

[demarpaint]

No.

 

[mrsilv04]

Set every credit card up so that it will automatically autopay on the due date, out of an account that will always have money in it (e.g a savings account), for the minimum amount due.

Problem solved in the future.

 

[John105]

Set every credit card up so that it will automatically autopay on the due date, out of an account that will always have money in it (e.g a savings account), for the minimum amount due.

Problem solved in the future.

Exactly, and to be clear, the statement balance, as opposed to the current balance. My life savings is at ALLY. There is no fee for overdraft. And now the limit for withdrawals from savings has gone up to 10 per month. Money market and savings currently are both at 4.2% apy, so technically, one could make 20 transactions per month and pay credit cards from an account earning 4.2%, automatically.

 

[Pablo]

Nope... Once it gets posted online I pay it off in full....I use my card to get airline points and it works great for me....

Nothing wrong with that. I just prefer to use their money for awhile, BUT I always make the pay date a minimum of three days before the due date. I can use their money and allow my money to get some interest. This and the points I get from my card purchases is not a huge sum, but well worth it.......

Now here is something funny, not bragging.........I went in and checked. FICO Credit score is 857 - seems like it's not been over 830 for ages. With Citibank Costco Visa due 9/02 and Fidelity Visa due 9/12. I think - yes nothing changed except we have been charging a LOT more recently. Which IS interesting!

 

[hrv]

Nothing wrong with that. I just prefer to use their money for awhile, BUT I always make the pay date a minimum of three days before the due date. I can use their money and allow my money to get some interest. This and the points I get from my card purchases is not a huge sum, but well worth it.......

Now here is something funny, not bragging.........I went in and checked. FICO Credit score is 857 - seems like it's not been over 830 for ages. With Citibank Costco Visa due 9/02 and Fidelity Visa due 9/12. I think - yes nothing changed except we have been charging a LOT more recently. Which IS interesting!

I thought FICO score does not go higher then 850....That is what I have and it shows a 850 as the top number...

 

[Donald]

have had this chase card for 30 years . don't use it too much as i have other cards that offer more . i had it set up as the card to pay for parking app. i used it and forgot . i guess i missed the online bill also . So i got a letter telling me that i am past due . i called them and they said i was 45 late already. they also said they reported it to the credit agencies automatically .

So i went to the chase bank and paid the amount owed , $6.50 .

i have never been late on any card. i paid them off monthly for the last 40 years i have had them . i am wondering what effect this will have on my credit rating . i usually float between 820 /850 score .

so you guys miss a credit payment before? what did it do to your credit rating

I have mine setup on autopay. But typically you you can call or email and say "because of our excellent business relationship please remove any late reporting to the credit reporting agencies". Provide some reasonable excuse why it happened even if you make something up. They will normally do it at least once.

 

[Donald]

Nothing wrong with that. I just prefer to use their money for awhile, BUT I always make the pay date a minimum of three days before the due date. I can use their money and allow my money to get some interest. This and the points I get from my card purchases is not a huge sum, but well worth it.......

Now here is something funny, not bragging.........I went in and checked. FICO Credit score is 857 - seems like it's not been over 830 for ages. With Citibank Costco Visa due 9/02 and Fidelity Visa due 9/12. I think - yes nothing changed except we have been charging a LOT more recently. Which IS interesting!

Some max FICO score is 840 and others it's 900. I have seen both.

 

[Pablo]

I thought FICO score does not go higher then 850....That is what I have and it shows a 850 as the top number...

Ours shows 900. Silly game I tell you!

 

[ATex7239]

Oh yeah, I’ve been late on all kinds of things before. Grew up poor and didn’t get to a comfortable financial place until I was in my 30’s. Threats of credit dings and law suits from creditors don’t scare you when your bank account is flat and you don’t know if you have enough gas and food to make it to payday.

 

[eljefino]

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.

Pay it down online the day after your plane tickets hit the card. You don't have to wait for the statement to close.

 

[Donald]

If you have a large CC balance across many cards then contact NFCC and work with them on a repayment plan. They are nonprofit and can negotiate a low interest rate during the repayment period.

 

[wpod]

If you have a large CC balance across many cards then contact NFCC and work with them on a repayment plan. They are nonprofit and can negotiate a low interest rate during the repayment period.

It is amazing how the non responsible people get the [bail outs]

 

[Pablo]

It is amazing how the non responsible people get the [bail outs]

Interesting. Yes. How does using this "NFCC" impact credit history?

I'm not heartless, I can see a single mom, dad split, couple+ kids, charging food..........needing some help. (yeah I know gov is there with food cards and such)
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Anyway THIS is interesting. I was poking around my Fidelity card stuff and clicked on "Request credit limit increase". You can include stashed cash.

 

[jdmfish]

It may be state dependent, but it can affect your insurance rates.

Yes it does. We pay $188 for full coverage for two vehicles. In Michigan which ranks top 5 for most expensive auto insurance rates.

 

[Pablo]

Yes it does. We pay $188 for full coverage for two vehicles. In Michigan which ranks top 5 for most expensive auto insurance rates.

Wait what? $188?? Per mo/year/6 months??? What cars? Ages? Driving habits???

 

[jdmfish]

Wait what? $188?? Per mo/year/6 months??? What cars? Ages? Driving habits???

Per month. 29 and 36. 06 Avalon and 06 Expedition.

I pay $79/month for my Avalon and I drive 15,000+ miles a year. Wife drives maybe 5,000 a year. 100/300/100 policy

 

[alarmguy]

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.

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.

Your income has nothing to do with credit scores. Credit bureaus do not track nor have any idea of your income.
I think what some are missing is the word "utilization" that is correctly called "credit utilization" It is the formula of amount of credit available to you vs how much of it you are using.

Let's say you have credit cards with an available $100,000 credit line between them all. If you on any given month have $10,000 in charges on them you are using 10% of your available credit. As that percent goes higher let's say you have $65,000 on your cards, it could indicate financial stress carrying a high balance. Everything is tracked in a trend so I am just giving a monthly figure for simplicity to explain what credit utilization is.

Here is the explanation straight from Experian
https://www.experian.com/blogs/ask-experian/does-a-credit-report-show-income/