Missed a credit card payment? Here’s how to fix it.
Credit card debt is no joke, neither is bad credit. Here are three steps to help you recover from missing a payment and negatively impacting your credit score.
It’s the first time you missed a credit card payment. You’re probably thinking: No. Big. Deal.
Hold up. I know it’s boring, but guess what? Credit card debt is no joke. And your credit score matters. A LOT. If you’re a HENRY™ who is crushing it with your money game, this probably isn’t news to you. You might even use a tool to keep track of your credit score (I often recommend CreditWise*)
But did you know that just one missed credit card payment can significantly ding your credit score?
You’d be surprised how easy it is to accidentally knock your credit score down a notch. Let’s talk through a real example. A HENRY™ at Stash Wealth had a near-perfect credit score of 837. They moved mid-month to a new address and forgot to update the billing address for a credit card they rarely use. The card only had a $33 charge, but without getting their statement in the mail, they forgot to pay it off. After 30 days, they noticed their credit score dropped to 716!
Don’t panic if you’re in a similar boat and missed a payment. You can and should do something to fix it.
3 steps to fix a missed credit card payment
To repair your damaged credit, you can follow three essential steps. Remember, repairing your credit takes time and effort, but by following these steps and maintaining responsible financial habits, you can gradually improve your credit score and regain financial stability.
Step 1: Call your credit card company
Talking to someone over the phone may sound like the last thing you want to do, but it’s worth it. Explain your situation. Speak directly with a representative. Tell them you want to pay the balance immediately. Be friendly. Tell them you had a great credit score, never missed a payment, and always pay on time (assuming this is true, they can reference your payment history). Explain what led you to miss this payment. Make it clear that it was a one-time thing. After explaining your situation, ask them to:
Waive your late fee, if you were charged one
Ask the lender to remove the late payment from your credit report
The entire phone call will take less time than it takes you to scroll through Netflix, deciding what show to start next.
Step 2: Write a letter to the reporting agencies
A drop of 121 points in your credit score could cost you $8,808.
Write a letter to each of the three main reporting agencies. Uh oh, am I losing you here? Too much work? Don’t even own stamps? Stay with us.
Remember the earlier example of the client whose credit score dropped from 837 to 716? One missed credit card payment could lead to a drop in your credit score of over 100 points. A change of over 100 points in your credit score can result in an increase of thousands of dollars of interest on a mortgage. Would you write a quick letter to save thousands of dollars potentially? I thought so.
Your letter should be similar to what you said on your phone call with the credit card rep, and you can send the same letter to all of the agencies (there are only 3). Explain what happened. Be nice. Don’t forget:
List your full name and address at the top.
Name the affected account (like “Bank of America credit card”).
Inform them you’ve notified the credit card company, asked them to remove the negative mark on your report, and wanted to alert the agency as well.
Include the impact this had on your credit score.
While buying stamps may be painful, I strongly suggest old-school letters instead of an online portal. In my experience with thousands of HENRYs™, I have seen greater success writing a letter than submitting a claim via online portals. Below are the addresses of the three agencies you should write to:
Equifax PO Box 740256 Atlanta, GA 30348
TransUnion LLC Consumer Solutions PO Box 2000 Chester, PA 19016-2000
Experian PO Box 9701 Allen, TX 75013
Step 3: Wait
It normally takes 30 to 45 days to get a response from rating agencies (they’ll respond via mail). Put a reminder on your calendar for 45 days after you mail your letters. If you haven’t gotten a response, follow up with the agencies.
Three easy steps, and you can make strides towards repairing your credit score.
These three steps to fixing your credit score after a missed credit card payment may not sound as easy as you hoped, but it’s well worth it. As we publish this post, the HENRY™, who saw their score drop to 716, is back up to 813 and climbing!
*Stash Wealth gives conflict-free advice and is not paid to recommend this tool.
Stash Wealth provides financial plans designed to assist high earning young professionals build and manage their wealth.
Stash Wealth offers a pragmatic approach to financial planning and wealth management. Whether saving up for Tahiti or a Tesla, we help you achieve your short-term and long-term goals.
Written by Priya Malani
Stash Wealth, Founder & CEO
Priya is a force in the personal finance space. As an industry disruptor, she specializes in bringing the unapproachable world of money to young professionals across the country.
