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Not paying credit payments on time can cause drops in FICO

Help yourself complete credit payments on time
By: Anirudh Keni
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If you were to not pay your credit bills on time, this can cause serious problems, but also there are some caveats for you to be safe. Although one must know that paying any of your credit payments late will result, in one form or another, in late fees varying based on card issuer policies.


With late payments, the later they are, the worse they will be. If you pay 30-60 days late it's probably not a big deal but once you hit the 90-day threshold, you are officially too late to cover your last month (or two) dues, and this can get reported to the credit bureau who can then slice your credit rating (FICO) score and hence make it harder to receive loans, get lower interest rates and so on. This kind of record stays on for over 7 years but differs depending on if the late payment was a one-time event or a recurring event. The one benefit coming out of this is that 90+ days can hurt your credit score as much as 120+ days, so once you are very late, you can continue to be late. However, a serious drop in credit scores is noted when the lending bank notifies you of foreclosures, sells your debts to collection agencies (‘sharks’), or ‘charges off’ your debt as a loss, automatically plunging your credit score.


Another reason for decline in FICO (Fair Isaac & Co) score can be attributed to a higher credit utilization ratio. The credit utilization ratio is the quantity of revolving credit you're currently using divided by the total amount of available revolving credit. In simpler words,  it's actually how much you currently owe divided by your maximum credit limit (expressed as a percentage). For example, if you have a credit card on which there is $10,000 credit available but the balance (of outstanding debts) is only $2,000, then your credit utilization is 20% (you are currently relying on only 20% of the 100% available credit). Credit utilization plays about a third (30%) role in determining your FICO score (credit rating). Closing a credit card can have negative effects as if you close your credit card with an outstanding balance, your revolving balance total limits will reduce, making it harder to borrow in the future.


FICO Range

  • 300-580 → Bad
  • 580-650 → Fair
  • 650-740 → Good
  • 750-850 → Excellent


APR rates are proportional to how late you are in making your payments, some going up as high as 30%, and within the first 60 days this might not be a problem but thereafter this can pile up on your account. Best practices include reviewing the bank document you made/signed when you received your credit card under the section of penalties, or another method involves calling up the bank to confirm their APR policies.


Further penalties can be subject to additional delays involved in repaying your pre-existing accumulated debts through interest rate hikes. Banks can start charging you greater interest as penalties to make it more expensive to delay repayments. Special introductory zero APRs for new credit cards can also be revoked if payments are not made timely. Also this penalty becomes more severe as time goes on and hence makes it harder to pay the bills that were already difficult to repay to begin with.


It is best to use apps that can calculate your scores and keep track of them and have an open conversation with the bank explaining if you want to be given an extension on repayments if there is currently financial distress in your life. You can also set up reminders and have automatic payment systems that pay your bills weekly so that you don’t have to remember to pay all the time. Sometimes just asking works and it is recommended that you work with your creditor to negotiate either a temporary break in payments, a reduction in the heavy interest rates, or increasing the timeline of the repayments. Clear communication is the key to doing this.


Some other steps to reduce a rising APR include:

  • Read your credit card agreement (know what you are signing)
  • Keeping consistent track of your credit reports and statements (or signing up for reminders)
  • Keep a low credit card balance consistently with having minimum overflowing payments due
  • Read the annual credit report statements that are provided to you from your banks and help yourself by being on top of everything



Always pay your fees on time. There is no question about that. There are many ways to get around paying for a long period of time but eventually, this will hurt you in the long run because it will tremendously hurt your FICO score makes it harder to buy houses, purchase loans, reduces the total amount of credit, can bring physical harm from creditors threatening physical actions, exposes you to numerous lawsuits and can lead to foreclosure, bankruptcy, closing down of your business, disgruntled families, divorces, depression, poverty and anything else that comes with being in unpayable debt. You can take a few days to pay and keep clear communication about your needs with the banks, but never not pay your dues.

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