Missing a credit card payment as a student may imply penalties and interest charges. It drops your credit score and makes getting future credit, like loans and mortgages, difficult for you. The exact impact depends on how late you are, how often it happens, and what you do next.
What If I skip a student credit card payment?
If you miss a student credit card payment, you may witness the following actions:
- You may need to pay a late payment fee. It means you must pay £12 for every delayed payment. You may also lose the benefits of 0% interest/promotional period.
- If you delay the payment by 30 days, the credit card company may report it to the credit reference agencies.
- You may not know this, but a single missed credit card payment may drop your credit score by 50-130 points. However, the drop still depends on the respective credit agency.
- The missed payments remain on your credit report for over 6 years. It remains even if you clear the dues after some time. However, the impact fades with time.
- Your credit score may start to recover after 6 months if you ensure on-time payments on other liabilities and, of course, credit cards.
If you’re a student with a thin credit file or no credit history, even one missed payment can have a bigger effect. This is because you lack positive credit history to offset it. Therefore, you may try very bad credit loans with no guarantor from a direct lender to clear the dues on time.
Check the approximate quotes and interest rates you may get on the loan. Apply for one if you can afford the repayments individually and clear the dues on the payment date. It prevents you from affecting your credit score for 6 long years. It also does not obstruct you from achieving your goals.
Does a 7-day missed credit card payment affect the credit score?
A 7-day missed credit card payment does not affect your credit score. This is because most credit card providers report the payments only after one does not clear dues within 30 days or is more overdue.
However, the credit card companies may still:
- Charge late payment penalties.
- 0% promotional period may be revoked
- The missed credit card payment does not appear as “missed” before 30 days on your credit report.
- Your credit score remains unimpacted until 7 days of non-repayment
So, paying 7 days late does not affect the credit score, but fees and loss of promotional terms are still possible.
Who sees your payment history?
When you have a pending student credit card, your creditor sends data to at least one of 3 credit agencies- Equifax, Experian and TransUnion. They report your account status every month.
They check whether you are regular with the monthly payments. Are you skipping payments any further? Lenders use this data to calculate your credit score and decide whether you may get a loan. If yes, what rates should be offered?
When does a credit card debt goes into default?
After multiple missed payments, credit card debt may be marked as in default. Creditors may render one after 3 months of non-repayment. A default is more serious than a missed payment.
It causes a major drop in your credit score and stays on your credit report for over 6 years from the default date. In extreme cases, the default may be passed to a debt collection agency. It damages the credit score.
What do to if you have recently missed a student credit card payment?
Here is what you can do if you have missed the student credit card payment lately:
Step 1- Try to pay as soon as possible
Log in to your student credit card account and try to pay the minimum (at least) immediately. Check whether you can pay the complete amount without affecting essential living needs. Try this even after 30 days may save your credit score and finances from falling drastically.
It instead reveals that you are trying hard to repay the dues. This may act in your favour. Moreover, it helps you recover quickly when the account updates.
Step 2- Contact your credit card provider
It is better to inform your credit card provider early of your inability to repay the dues on time. It may help you get a negotiable plan or a payment plan. Next, check whether they have reported the missed payment to the Credit Reference Agency.
If not, then you can try to control things by being open about the reason for missing the payments. Check whether the company can waive the late payment fees. Next, analyse whether your 0% introductory period still exists, or they have revoked it.
Step 3- Check your credit report
Make it a habit to review your credit report twice a month with 3 primary CRAs: Experian, TransUnion, and Equifax. It will help you understand the payment progress and impact of missed payments better. Check whether the details of the reported late payments are intact and accurate. If you spot any errors, you must report them to any CRA and request an updated credit report.
What can student do to avoid missing credit card payments?
Here is what students can do to avoid skipping any credit card payments:
a) Set up direct debit
Setting up direct debits may help you remain regular with every student credit card payment. Set one up in the bank account into which you receive your monthly income. It therefore becomes easier for you to repay the dues automatically by scheduling them for the date.
b) Align your payment dates accordingly
The student loan payment dates, mortgage dates, or any other pending loan payment dates must not collide. Check whether you can schedule the credit card payments comfortably to repay the dues on time. Analyse the timeline when you receive your income and explore the possibility accordingly.
c) Keep your credit utilisation low
Avoid using credit cards for every small purpose. Instead, try to depend more on savings, an emergency fund, and other passive income sources for most of your needs. Explore the interest rates before choosing a credit card. Avoid applying for new credit cards just to benefit from the 0% introductory period.
Bottom line
Non-repayments on a student credit card may lead to penalties and high interest charges. It may affect your credit score and ability to qualify for cheaper interest rates and flexible terms on loans and credit cards. Identify the impact of missed payments on your finances and set direct debits for payments. Avoid new credit cards for some time and keep your credit utilisation ratio low.
