Your credit score drops when ready, then your account gets closed and sent to collections
Missing a credit card payment triggers a chain of events that starts within days and can affect your finances for years. Your card issuer reports the missed payment to the three credit bureaus — Equifax, Experian, and TransUnion — as soon as you're 30 days late. This single report can drop your credit score by 100 points or more, depending on your current score and payment history. The damage compounds: at 60 days late, the report gets worse; at 90 days late, worse still.
After 120 to 180 days of non-payment (the exact timeline varies by card issuer), the bank closes your account and sells the debt to a collection agency. You then owe the collection agency, not the original card company. The collection agency can sue you, garnish your wages, or place a lien on your property — the specific options depend on your state's laws and the amount owed. A collection account stays on your credit report for seven years from the date you first missed the payment, even if you pay it later.
Key Takeaways
- A missed payment is reported to credit bureaus at 30 days late and damages your score when ready, with worse reports at 60 and 90 days.
- After 120 to 180 days, the card issuer closes your account and sells the debt to a collection agency that can sue you or garnish wages.
- Collection accounts remain on your credit report for seven years, even if you pay them, and make it harder to borrow money at reasonable rates.
- Stopping payment also means you stop earning any rewards or benefits tied to the card, and the issuer may raise rates on other accounts you hold with them.
- If you cannot pay in full, contacting the card issuer before you miss a payment gives you options like hardship programs or payment plans that collection does not.
How your credit score gets damaged at each stage
Your credit score is built from five factors: payment history (35 percent), amounts owed (30 percent), length of credit history (15 percent), credit mix (10 percent), and new credit inquiries (10 percent). A single missed payment hits the largest factor — payment history — and the damage is when ready and severe.
At 30 days late, the issuer reports a "30-day delinquency" to the bureaus. This alone can lower your score by 60 to 100 points. At 60 days late, the report worsens to "60-day delinquency," dropping your score further. At 90 days late, it becomes "90-day delinquency," and the damage is compounded. If you then miss 120 days, the account is typically charged off — meaning the issuer writes it off as a loss and sells it to collections. A charge-off is one of the most damaging items on a credit report.
The damage to your score affects your ability to borrow money for years. With a damaged score, you will pay higher interest rates on mortgages, auto loans, and new credit cards — if you can borrow at all. Some employers and landlords also check credit reports, and a history of unpaid debt can affect your housing and job prospects.
What happens when a collection agency takes over
Once your account is charged off and sold to a collection agency, you no longer deal with the original card company. The collection agency now owns the debt and has the legal right to pursue payment. They will contact you by phone, mail, and sometimes email. Under the Fair Debt Collection Practices Act (FDCPA), they cannot call before 8 a.m. or after 9 p.m., cannot threaten you, and cannot contact you at work if your employer forbids it — but they can call repeatedly and contact family members to locate you.
If you do not pay, the collection agency can file a lawsuit against you in civil court. If they win, they get a judgment, which allows them to garnish your wages (take money directly from your paycheck), place a lien on your property, or freeze your bank account. The exact tools available depend on your state. Some states protect a portion of your wages or certain assets; others offer less protection. A judgment can remain on your credit report for seven years and can be renewed in some states, extending collection efforts even longer.
Paying a collection agency after it has sued you stops the wage garnishment or bank freeze, but the collection account still appears on your credit report for the full seven years. Paying does improve your score somewhat — a paid collection is better than an unpaid one — but the damage from the original missed payment and the charge-off remains.
Fees and interest that pile up while you are not paying
When you miss a payment, the card issuer charges you a late fee — typically $25 to $40 for the first missed payment and up to $40 for subsequent ones. If you miss another payment 30 days later, you get charged again. These fees add up quickly and are added to your balance, which then accrues interest.
Your interest rate may also jump. Most card issuers have a clause allowing them to raise your rate to the "penalty rate" — often 29.99 percent or higher — if you miss a payment by 60 days or more. This penalty rate applies to your entire balance, not just new charges. If you owed $5,000 and your rate jumps from 18 percent to 29.99 percent, you are now paying roughly $125 more per month in interest alone, on top of late fees.
The longer you do not pay, the more interest and fees accumulate. By the time the account is charged off at 120 to 180 days, your original debt may have grown by 20 to 40 percent. The collection agency then pursues this inflated amount, and if they win a judgment, you owe the full amount plus court costs and collection agency fees.
How non-payment affects your other accounts and future credit
Missing payments on one card can trigger problems on your other accounts with the same issuer. Many banks have cross-default clauses, meaning if you miss a payment on one product (a credit card, for example), they can declare you in default on other products you hold with them — such as a home equity line of credit or a personal loan. They may also close those accounts or freeze them, preventing you from using available credit.
Non-payment also affects your credit mix and utilization ratio. If the card is closed, you lose that available credit, which raises your utilization ratio on remaining cards (the percentage of your total available credit you are using). A higher utilization ratio lowers your score further. If the card was your oldest account, closing it shortens your average account age, which also lowers your score.
Future lenders see the missed payments and charge-off on your credit report. Even if you pay the collection agency years later, the negative marks remain for seven years. This means higher interest rates on mortgages, auto loans, and credit cards for years to come. Some lenders will not lend to you at all if you have recent charge-offs or unpaid collections.
Options before you miss a payment
If you are struggling to pay, contact your card issuer before you miss a payment. Most issuers have hardship programs designed for people facing temporary financial difficulty. These programs may offer a lower interest rate, a reduced monthly payment, a pause on payments for a set period, or a combination of these. The catch is that you must ask before you are 30 days late — once you miss a payment, the issuer is less likely to work with you.
When you call, explain your situation clearly: job loss, medical emergency, reduced hours, or other specific hardship. The issuer will ask about your income and expenses to determine what you can afford. Be honest about what you can pay. If you say you can pay $200 a month and then do not, the program ends and you are back to the original terms.
Some issuers offer a forbearance agreement, which temporarily lowers or pauses your payments. Others offer a debt management plan through a nonprofit credit counselor, which consolidates your debt into a single monthly payment to the counselor, who then distributes it to your creditors. These plans typically lower your interest rate and extend your repayment period, making payments more manageable. The downside is that the card is usually closed during the plan, and the plan itself appears on your credit report — but it is far less damaging than a charge-off or collection account.
What you can do if you have already missed payments
If you are already 30 to 90 days late, you still have options. Contact the issuer when ready and ask about hardship programs or settlement. Some issuers will negotiate a settlement — you pay a lump sum that is less than the full balance, and they forgive the rest. This stops the account from being charged off and sold to collections, though it still appears as a settled account on your credit report, which is better than a charge-off.
If the account has already been charged off and sold to collections, you can negotiate directly with the collection agency. They may accept a lump-sum settlement for less than the full amount, or they may agree to a payment plan. Get any agreement in writing before you pay. Some collection agencies will also agree to remove the account from your credit report if you pay in full, though this is less common and depends on your state's laws.
If you cannot afford to pay even a settlement, you may be able to dispute the debt if there are errors in the account — for example, if the amount is wrong or if the account was not yours. You can also wait out the statute of limitations, which varies by state (typically three to six years). After the statute of limitations expires, the collection agency cannot sue you, though they can still contact you and the debt remains on your credit report until seven years have passed since the original missed payment.
How long the damage lasts and when your score recovers
A missed payment stays on your credit report for seven years from the date you first missed the payment. This does not mean your score stays damaged for seven years — it recovers gradually as you rebuild your payment history — but the negative mark itself does not disappear until the seven-year mark.
Your score begins to recover as soon as you start making on-time payments again. If you missed a payment 18 months ago and have made every payment on time since, your score will be significantly higher than it was right after the missed payment, though still lower than if you had never missed it. The older the missed payment, the less it affects your score. A missed payment from five years ago has much less impact than one from six months ago.
Rebuilding your score after a charge-off or collection account takes time and consistent on-time payments. Most people see meaningful improvement within 12 to 24 months of returning to on-time payments, though reaching the score they had before the missed payment can take three to five years. Using a secured credit card or becoming an authorized user on someone else's account can speed recovery, as can paying down balances on other cards to lower your utilization ratio.
Frequently Asked Questions
Can a credit card company sue me for not paying?
Yes. After your account is charged off and sold to a collection agency, the agency can file a lawsuit against you in civil court. If they win, they get a judgment that allows them to garnish your wages, freeze your bank account, or place a lien on your property. The specific tools available depend on your state's laws.
Will I go to jail for not paying a credit card?
No. Debtors' prisons were abolished in the United States, and credit card debt is a civil matter, not a criminal one. A collection agency cannot have you arrested for owing money. However, if you ignore a court order or fail to appear in court after being sued, you could face contempt of court charges, which are criminal.
What is the difference between a charge-off and a collection account?
A charge-off is when the card issuer writes off the debt as a loss and stops trying to collect it themselves. A collection account is when the issuer sells the debt to a third-party collection agency, which then pursues payment. A charge-off appears on your report when the account is charged off; a collection account appears when the agency takes over. Both are damaging, and both can remain on your report for seven years.
If I pay a collection agency, does it come off my credit report?
No. Paying a collection agency removes the account from active collections, but it remains on your credit report for seven years from the original missed payment date. A paid collection account is better for your score than an unpaid one, but the mark itself does not disappear until the seven years are up.
Can I negotiate with a collection agency to pay less than I owe?
Yes. Collection agencies often accept settlements for less than the full balance because they know many people cannot pay in full. The amount they will accept varies, but 40 to 60 percent of the balance is common. Get any settlement agreement in writing before you pay, and ask whether they will remove the account from your credit report in exchange for payment — some will, depending on your state.