It is a fact that most credit scoring formulas devote 35% of their weight on your payment history. Within that component, there is considerable negative pressure on credit scores for each account that reports a serious delinquency.
| “Serious Delinquency” | Credit Score Risk Factor Codes |
| Equifax | 39 |
| Experian | 39 |
| TransUnion | 39 |
| NextGen | D7 |
Missing a payment can cause your score to drop considerably. That drop can be somewhat corrected if you catch up on the account, although some impact from that late payment can be felt for a full 7 years from the date of the missed payment. That being said, a single 30 day late payment will be somewhat minor once corrected. A more serious delinquency will raise serious questions about your creditworthiness for years to come.
What is a Serious Delinquency?
Some lenders may view a serious delinquency as 60 days or longer, while others allow a more lenient 90 days before they classify a delinquency as serious. While Fair Isaac does not reveal the actual time frame, we believe it to be 90 days. To be safe though, you should assume that any delinquency of 60 days or more is at substantial risk of being labeled as a serious delinquency.
A serious delinquency invalidates excuses such as forgetting to make a payment, losing the bill or being on vacation during the payment cycle. While those excuses can easily explain a short delinquency, a serious delinquency is evidence of substantial financial problems.
When an account is seriously delinquent, your credit scores will drop considerably. If you allow them to go into default, they will plunge even more. Finally, your scores will hit the basement once your accounts are reported with collections or public records.
If you are able to catch the account up prior to collections, you will regain much of your lost points once the account is reported in current status again. The account will continue to provide a somewhat negative influence on your credit scores until you have kept the account clean for 7 years following the delinquency. After 7 years, the account can revert to a positive status once again.
If your credit cards are seriously delinquent, you need to act quickly to avoid charge-offs and collections. You may either send in the arrears to catch up the account on your own, or you need to get the account re-aged.
Note: Serious delinquency is credit bureau risk score reason 39. Code D7 applies to NextGen scores.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
Favorite quote:
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Thomas Jefferson
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