December 1st, 2009
Dear Credit Karma – Credit Cards
Our new weekly Blog Q & A is for our users to ask any questions about credit and personal finance; we’ll answer and post on the blog for readers to catch up on what our users are asking. Submit a question now, and maybe we will answer your question on our next Q & A post! So, without further ado, here’s the inaugural Blog Q & A.
Dear Credit Karma,
Is a credit card payment paid 5 days late reported as late on a credit report?
A payment that is only 5 days late will not typically show up on your credit report, but you may face other consequences including paying a late fee as high as $39 and an interest rate increase of up to 30% on your outstanding balance. While the rest of the provisions of the CARD Act, effective in February 2010, includes cardholder safeguards against late payment rules such as full disclosure of late payment deadlines and postmark dates on your billing statement, each issuer can set specific payment guidelines that you should know for each of your cards so you know when your payment will be considered late.
Credit card payments posted 30-60 days past due will become a negative mark on your credit report and will temporarily damage your credit score anywhere from 60-110 points, depending on your credit standing (You can see how much a late payment will affect your score at our Credit Simulator). Furthermore, the later your payment and the more frequently you default affects how much your credit score is impacted. At 90 past due, your account is considered delinquent and will remain as a negative mark on your credit report for up to 7 years, which will damage your credit score even more, as well as stay on your credit report for a longer period of time. Avoid at all costs being later than 180 days of less-than-minimum or no payments, at which point your account will be “charged off”; your issuer will close your account, a debt collection agency may pursue you until you pay your debt in full, and your credit score will take an even worse hit due to a closed credit account.
Even though being a few days late may not drastically impact your credit score, paying on time means you’ll save yourself the late fees and higher interest charges. Try to avoid these fees by checking your billing statement for the specific date your payment is due and be sure to send it beforehand, follow payment guidelines precisely, and always pay at least the minimum amount. The best way to avoid being late is to set up automatic online payments so you never miss a deadline.
Dear Credit Karma,
I have an average credit score, but I want to get a credit card without spending 200 dollars. Is that possible?
While it is definitely possible to get a credit card without spending 200 dollars, it depends on where your “average credit score” falls and what type of credit card you can qualify for.
For example, if your score falls in our range of fair credit scores of 550-639, you are much more limited in your credit card options and may only be approved for a secured credit card, which has some fees and costs. A secured card, like the Public Savings Bank Secured Visa, functions like a credit card but also requires a minimum $200 security deposit from the cardholder. On the bright side, this card has no credit requirements and is especially effective at building good credit history for people with less-than-perfect credit. However, like all secured cards, there is a $200 minimum security deposit and this card also requires a one-time application fee of $79. If you aren’t willing to deposit the $200, keep in mind that you’ll get 100% of your deposit back if you close your account in good credit standing. Think of the deposit as an investment in your credit history that will enable you to build your credit and qualify for a traditional credit card. Orchard Bank Classic Mastercard is another good secured card option that has no processing fee, minimum $200 security deposit, and the annual fee is waived for the first year; plus you have the option to upgrade to an unsecured credit card if you qualify.
If you want an unsecured credit card, your score should fall within our good credit range from 640-719. With that credit score, you are likely to qualify for credit cards like the Chase Freedom Card, which is a great cash back card with no annual fee and $50 cash back with your first purchase. Another good option is the Citi Platinum Select Card, which has 0% APR for 9 months and low interest and fees. With a better credit score, you’ll have a better chance qualifying for a credit card with low fees and does not require a deposit.
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WATCH OUT FOR THESE GUYS!! Do not, I repeat , do not rely on the credit score they give you.
They have my score rated on having an $89K mortgage balance when the fact of the matter is I only owe $24K
Their service is misleading and cannot be trusted
All of our data including scores and debt amounts are directly from TransUnion. If you believe the data is wrong, you may want to contact them. Our service is designed to help members insure the accuracy of their data and credit reports.