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Will Creating A Repayment Plan With Your Credit Card Company Hurt Your Credit Score?


One of our readers, CB, sent us this question:

I have a couple of credit cards that I have been 30 days past due on. This is just because I’m a little tight strap for cash right now. One of my options is to enter a prepayment plan with the credit card company, I am willing to do it but will this hurt my credit score? What effect that this have on my credit history? Please advise.

Hi CB, thanks for your question!

Creating a prepayment plan with your credit card company will not hurt your credit score at all. In fact, it’s the very best thing you can do in this situation. Just make sure that you stand by whatever agreement you make with them – to the letter. I say this because if you do not pay as agreed you can expect, at a minimum, to have your interest rates on the card raised, as well as incur additional penalties and fees. Your credit card company could also close your account.

The only things that show up on your credit score as far as your credit cards are concerned, are your limit, your available balance, and whether or not you pay late, or on time.

As long as you keep to the agreement, and keep making your payments on time, then your credit card company will not report you as being late, and your credit score will not suffer.

If you want to check and see how recent late payments may have affected your credit score then you can always use the recent TransUnion Class Action Settlement to take advantage of some free credit monitoring.

Just know that making a payment arrangement with your credit card company is the best thing you can do to protect your credit score right now.

Thanks again for your question!

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