Delinquency

Delinquency means missing a payment on its due date. Even one day late counts, and it applies to credit card bills, loan instalments, phone bills and utilities alike. A small amount leaves the same mark as a large one.

The real damage is the record, not the interest. Passing 30 days usually puts a mark on your credit file, and 90 days or more is classed as serious delinquency, which leads to rejected loans, reduced card limits and higher rates. The record lingers even after you have paid.

Late-payment rates add several percentage points on top of your original rate, so the burden grows quickly. A 5% loan can carry more than 10% once it goes late. Stack a few and repayments stop touching the principal at all.

If you think you will miss a payment, call the lender before it goes late rather than after. Deferral, term extension and restructuring programmes exist, and the terms are far better when you ask early. Avoiding contact is what turns a missed payment into a spiral.