Having an overdue balance on a credit account can have more consequences than you’ve possibly considered. If you’ve recently had an increase in late payments it is something that is quicker to rectify. However, if you have a high overdue balance on accounts, you need to remember that a fee is added to the amount you owe, as well as an increase in your interest rate. The longer you have an outstanding payment, the harder and more expensive it becomes to pay back. Your credit report will also take a hit the longer the balance goes unpaid and this can affect your ability to secure credit in the future.
What if I have a increase in overdue balance levels?
Credit providers will usually wait about 30 days after the late payment deadline to report the late payment to the credit bureaus. This means that if you’re able to make the payment within 30 days of being late, this will unlikely affect your credit score. After about 2 months of a payment being late, the credit provider can increase the interest rate to a penalty rate.
What happens if I have high overdue balance levels?
If you have a few accounts with high overdue balances this will affect your credit score. If your accounts haven’t been paid for 6 months, your account will be charged off. To avoid a charge off, you need to pay the full minimum payment owed. A charge off will be added to your credit report and it will remain there for up to 7 years, even if you settle the payments due. However, this doesn’t mean that you shouldn’t pay your charge off balance, as once you do, the status in your credit report will change to indicate that the balance was settled.
What can I do to rectify an overdue balance?
To bounce back from an overdue payment, there are a few things that you need to do. Firstly, you need settle the delinquent balance on your accounts. This may take you some time, but you should try and pay back a little more each week. For example, if you’re meant to be paying R100 towards your weekly repayment, pay R120 if you’re able to. This will help you to reduce your delinquent level every week until you’ve paid in full. Secondly, you should make on-time payments with all your other credit accounts. Lastly, you will need to be patient. As the overdue balances are cleared and more time goes by, there will be less of an impact on your credit score.