Your payment gets reported to credit bureaus, your interest rate climbs, and fees stack up fast

When you miss a credit card payment, the card issuer reports it to the three major credit bureaus—Equifax, Experian, and TransUnion—usually after 30 days. That missed payment stays on your credit report for seven years and damages your credit score immediately. At the same time, your card issuer adds late fees (typically $25 to $40 for the first miss, up to $40 for subsequent ones), raises your interest rate, and begins charging interest on the full balance at that higher rate.

The longer you don't pay, the worse it gets. After 60 days, the damage to your score deepens. After 90 days, the account may be handed to a debt collector. After 120 to 180 days, the card issuer may charge off the account—meaning they write it off as a loss on their books and sell the debt to a third party. A charge-off stays on your report for seven years and makes borrowing much harder.

Key Takeaways

  • A missed payment is reported to credit bureaus after 30 days and damages your score immediately, with the damage worsening at 60, 90, and 120 days.
  • Late fees start at $25 to $40 per miss, and your interest rate can jump to the penalty rate listed in your card agreement, sometimes 29% or higher.
  • After 120 to 180 days unpaid, the card issuer typically charges off the account and sells the debt to a collection agency that will contact you repeatedly.
  • A charge-off does not erase the debt—you still owe it, and a collector can pursue legal action, wage garnishment, or bank levies depending on your state.
  • Paying the debt, even years later, stops collection calls and prevents future wage garnishment, though the charge-off itself remains on your report for seven years.

How late fees and interest rate increases work

Your card issuer's agreement spells out two separate penalties for missing a payment. The first is the late fee, which appears as a charge on your next statement. Most cards charge $25 for the first late payment in a six-month period, then $40 for each one after that, up to a cap (often $40 total). If you're under 18, the cap is lower.

The second penalty is the interest rate increase. Your card agreement includes a penalty APR—the rate the issuer can charge if you miss a payment. This rate is often 29% or higher and applies to your entire balance, not just new purchases. Once your account is current again (you've paid on time for six months straight), the issuer may lower your rate back, but they're not required to. Check your card agreement or call the issuer to find out what your penalty APR is.

Interest compounds daily, so the longer you carry a balance at a higher rate, the more you owe. A $5,000 balance at 29% APR costs you roughly $121 per month in interest alone if you pay nothing else.

What happens to your credit score

Payment history makes up 35% of your credit score, so a missed payment hits hard. Most people see a drop of 100 points or more, depending on how high their score was before. Someone with excellent credit (750+) typically loses more points than someone already in the fair range (650–700), because the damage is relative to what you had.

The damage is not uniform over time. The first 30 days after a missed payment cause the steepest drop. At 60 days, your score drops further. At 90 days and beyond, the damage continues but at a slower rate. However, the missed payment itself—not the charge-off—is what stays on your report for seven years. After seven years, it falls off automatically, and your score begins to recover.

During those seven years, lenders see the missed payment when they pull your report. This makes it harder to get approved for new credit cards, loans, or mortgages, and if you are approved, you'll pay higher interest rates. Some employers and landlords also check credit reports, so a missed payment can affect housing and job prospects.

When the debt goes to a collection agency

If you don't pay for 120 to 180 days (the exact timeline varies by issuer), the card company typically charges off the account. This does not mean the debt disappears. It means the issuer has given up on collecting it themselves and has sold the debt—usually for pennies on the dollar—to a third-party debt collector.

Once a collector owns the debt, they can contact you by phone, email, and mail. Under the Fair Debt Collection Practices Act (FDCPA), they cannot call before 8 a.m. or after 9 p.m. in your time zone, cannot call your workplace if your employer forbids it, and cannot harass you or make false threats. If you send them a written request to stop contacting you, they must stop—though they can still pursue legal action.

The collector's goal is to get you to pay. They may offer to settle for less than the full amount owed, especially if the debt is old or if you can pay a lump sum. Negotiating a settlement can be worth doing, because it stops the calls and prevents them from suing. However, any settlement should be in writing before you pay, and you should understand that paying a settled debt still leaves the charge-off on your report.

Legal action and wage garnishment

A debt collector can sue you in small claims or civil court, depending on the amount owed and your state's rules. If they win a judgment, they can pursue wage garnishment (taking a portion of your paycheck), bank levies (freezing and taking money from your bank account), or liens (claiming a stake in property you own). The amount they can take and the process for doing so varies by state.

Some states protect a portion of your wages from garnishment—for example, North Carolina allows garnishment of up to 25% of your disposable income, while South Carolina allows up to 25% of gross income. Other states have different thresholds. A few states, like Texas, make it very difficult to garnish wages at all, though bank levies are still possible.

The key point: a lawsuit is not automatic. Collectors pursue legal action when the debt is large enough to justify the cost, when they believe you have assets or income to collect from, or when state law makes collection easy. Smaller debts often go unpursued in court, but the collector can still call and report the debt to credit bureaus.

How to stop the damage: paying back or settling

If you have missed a payment but the account has not yet been charged off, contact your card issuer immediately. Explain what happened and ask if they will waive the late fee or lower the penalty APR. Many issuers will do one or both if you have a long history of on-time payments and this is your first miss. Bring the account current as soon as you can—the longer it sits unpaid, the harder it is to negotiate.

If the account has already been charged off and sold to a collector, you have two main paths: pay the full amount owed, or negotiate a settlement. Paying in full stops all collection activity and prevents lawsuits, but the charge-off remains on your report. A settlement (paying less than you owe) also stops collection activity, but you need the agreement in writing before you pay. Some collectors will agree to remove the charge-off from your report in exchange for payment, though this is less common and should be negotiated in writing.

Before you pay anything, check whether the debt is still within your state's statute of limitations for debt collection. In most states, this is three to six years from the last payment or charge-off. If the debt is older than the statute of limitations, a collector cannot sue you, though they can still call and report the debt. Paying an old debt can restart the clock in some states, so understand your state's rules before you pay.

Rebuilding after a missed payment

Once you've brought the account current or settled the debt, focus on preventing future misses. Set up automatic payments for at least the minimum due, or set a phone reminder a few days before the due date. If cash flow is tight, contact your issuer and ask about a hardship program—some offer lower interest rates or payment plans for people facing temporary financial difficulty.

Your credit score will recover over time, but it takes patience. The missed payment's impact weakens after two years and continues to fade as it ages. In the meantime, keep all other accounts current, pay down balances, and avoid opening new accounts unless necessary. Each on-time payment rebuilds your score slightly, and after seven years, the missed payment falls off your report entirely.

Frequently Asked Questions

Can I remove a missed payment from my credit report before seven years?

You can dispute it if it's inaccurate, but if it's accurate, it will stay for seven years. Some issuers will remove a single missed payment as a goodwill gesture if you have a long history of on-time payments and ask politely, but they're not required to. Paying the debt does not remove the missed payment from your report.

What's the difference between a charge-off and a write-off?

A charge-off is when the issuer removes the debt from their active accounts and sells it to a collector. A write-off is an accounting term meaning the issuer has recorded the loss on their books. Both mean the same thing for you: the debt is sold to a collector, and you still owe it.

If I settle a debt for less than I owe, do I have to pay taxes on the forgiven amount?

Possibly. The IRS may treat forgiven debt as taxable income. If a collector forgives $2,000 of a $5,000 debt, you may owe taxes on that $2,000. Ask the collector for a Form 1099-C (Cancellation of Debt) after settlement, and consult a tax professional about whether you owe taxes.

Will paying off old debt improve my credit score?

Paying it stops collection calls and prevents lawsuits, but it does not significantly improve your score. The charge-off stays on your report either way. However, paying it is still worth doing to avoid wage garnishment and to stop the collector from pursuing legal action.

Can a debt collector contact my family or friends about my debt?

No. Under the FDCPA, a collector can contact family or friends only to find your contact information, not to discuss your debt or shame you. If a collector is harassing you or violating these rules, you can file a complaint with the Consumer Financial Protection Bureau or sue the collector.