What Happens If I Don’t Pay My Credit Card Bill?

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Dear Experian,

What would happen if I didn't pay my credit card bill, but I pay all my other bills on time every month? Would it still hurt my credit?

- JAN

Dear JAN,

Even if you pay all your other bills on time, not paying your credit card bill will cost you — not only in terms of late fees and additional interest charges, but also in terms of the impact on your credit history and credit scores.

Skipping a Credit Card Payment

Missing just one credit card payment will most likely result in your credit card company charging you a late fee in addition to the interest charged on the balance. Some credit card companies automatically raise your interest rate as soon as you become delinquent, so not making a payment can cause your interest expense to be even higher than expected. Your credit card contract will explain the interest rates, late fees and other consequences of missing a payment.

While some credit card issuers may offer a short grace period before reporting your account as delinquent, your creditor will almost certainly report anything more than 30 days late to the credit reporting agencies. Once a late payment appears on your credit report, your credit scores will be affected.

The longer you go without paying, the more serious the consequences will be. Late fees begin to add up, and your credit scores will suffer more the later you are on your account. If you continue missing payments on your credit card account, your creditor could close the account. Closing the account will affect your utilization rate, which will likely cause your credit scores to decline further.

Charge Offs and Collection Accounts

After a few months, your creditor may decide to charge off the account, which means they will write the debt off as a loss. They may also decide to sell or transfer the account to a collection agency. Once a collection agency owns the debt, you may see that collection account appear on your credit report in addition to the original account listing. Both the original account and the collection account will remain on the report for seven years from the original delinquency date of the debt.

An account that has been charged off or sent to collections is considered a serious delinquency. Having an unpaid charge off or collection account on your credit report will hinder your ability to obtain new credit or to qualify for things like a cell phone, renting an apartment, car insurance or even employment. Employers don't get credit scores, but they may review your credit history as part of the hiring decision.

Your Creditor May Also File Suit Against You

In some cases, your creditor may take you to court to try to recover the debt. If a lawsuit is filed against you, it becomes a matter of public record, and the civil judgment will appear on your credit report. Civil judgments remain on the credit report for seven years from the date they were filed. Like charge offs and collections, they are considered very negative and can prevent you from obtaining credit or other goods and services in the future.

If you are having trouble making payments on your credit card, consider seeking advice from a reputable credit counselor or financial advisor. They may be able to help you develop a plan to better manage your debt and continue making payments to preserve your good payment history.

Thanks for asking,
The "Ask Experian" Team

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