Understanding delinquency Credit card delinquency occurs when you do not make a minimum payment on your account by the date the payment is due. Once a payment is overdue, your account is delinquent, and the more time it has been outstanding, the more severe the effects. Lenders report delinquent accounts typically 30 days after they have become overdue, and this will have a direct impact on your credit score.
2/6
Impact on your credit score One delinquency will decrease your credit score several points, and in the future, it will be more difficult to obtain loans or new credit. Multiple late payments will make it worse, with increased interest rates and denial of future credit applications. The delinquency may remain on your credit report up to seven years, indicating risk to other lenders.
3/6
Fees and interest charges Delinquency will incur late payment fees and penalty interest rates. The fees grow very quickly, especially if you have a running balance. For example, late payment can range from ₹500–₹1,000, after which interest rates go up to over 40% per annum. Compound fees make debt increasingly complicated to pay and a vicious circle which can put you into default unless caught early.
4/6
Collection and legal threats If delinquency is allowed to go on for several months, banks will charge off or sell your account to collection agencies. Continued non-payment can also lead to legal actions like court notices or garnishment of wages in the worst-case scenario. Apart from economic duress, dealing with recovery agents and legal notices is a cause of immense emotional trauma, highlighting the reason why immediate action has to be taken prior to it going this far.
How to recover from delinquency The first thing to do is to inform your bank and tell them the truth about your circumstances. Banks will provide restructuring facilities such as lower EMIs, temporary relief or balance transfer to personal loans with a lower rate. Pre-arranging automatic payments or reminders will also prevent future defaults. In extreme situations, go to credit counselling to prepare a repayment schedule and establish financial discipline for a period of time.
6/6
Creating good habits It is not merely paying dues but avoiding falling back into it. Create a monthly budget to pay off debts first, eliminate unnecessary spending, and save for emergencies. Maintaining your credit utilization at less than 30% of your limit and regularly paying bills on time helps build your credit history. By being patient and keeping discipline, recovery from delinquency and restore faith in finances is achievable.
