What Is a Delinquent Loan?

Each time you borrow money, your loan provider sets a specific repayment deadline you need to meet each month within the entire loan life. If you stick to the timeline, your credit account will always be in good standing.

But if your lender doesn’t receive a loan payment on time, your account will get a delinquent status, meaning that you’re past due on your debt. Let’s find out what is a delinquent loan, what consequences it can cause, and what you should do if your account is reported as delinquent.

What Is a Delinquent Payment Definition?

A delinquent payment is a definition lenders use to describe any debt transaction that wasn’t delivered on or before its maturity date. Even if you delay your loan payment by just one day, your credit account already gets a delinquent status.

However, most loan providers have a certain repercussion-free period after your loan is past due. If you manage to pay within this timeline, you can get off lightly and avoid serious financial consequences.

Examples of Delinquent Debt

When it comes to the lending industry, any loan can potentially turn into delinquent debt. Private and federal student loans, auto loans, mortgages, and installment loans with no credit check can get this status if you don’t make your debt payments by the agreed-upon date. However, besides loans, delinquent debt can also come in the form of taxes, audit disallowances, fines, and other administrative debts. The only condition they must meet is not to be paid off on time.

Delinquent vs. Default: What’s the Difference?

Although many people use the term “default” to describe any delayed or missed payment, there’s a legal difference between delinquent vs. default.


Delinquency is considered a fact of missing your debt payment. Thus, each time you don’t pay as it is scheduled in your promissory note, your account will be considered delinquent. As a result, you will face late fees, which can come in the form of either a fixed amount or a percentage of your loan amount. Late fees are usually charged for each day that passes after your due date.


Your credit account should make a certain way before it gets a default status. Simply put, a more extended period should pass before your late payments go into default. The exact duration depends on the lender and the loan type.

If we talk about credit cards, even one day past due may be enough to declare your account default. A personal loan can come with a 30- or 60-day grace period before a lender reports it as default. When it comes to mortgages, your payment may be considered delinquent within up to 90 days. Federal student loans have the longest delinquency period, which is 270 days.

When Do Lenders Report a Delinquent Payment?

There’s a difference between when your account becomes delinquent and when a lender reports a delinquent payment.

Typically, there’s a certain timeline or grace period you have to make your payment without serious repercussions. This period is determined by your loan type. Suppose that you’ve obtained a $1,000 quick loan with no credit check and a due date on the 10th of the month. If you face a salary delay and only manage to make your monthly payment on the 15th of the month, a lender is most likely not to report it to major credit bureaus.

However, if more than 30 days have passed since the last payment, a lender will report your late payments. This will negatively affect your credit scores and may result in problems with getting approved for future loans.

Below are some common terms for reporting delinquency based on the loan type:

Loan Type Days Until Reporting Delinquency
Personal Loans 30
Mortgages 30
Private Student Loans Vary by the lender, but commonly 30
Federal Student Loans 90
Credit Cards 1 to 30
Auto Loans 10

The longer you keep missing payments, the closer you get to the risk of going into default.

Does a Delinquent Account Affect Your Credit Score?

A delinquent account will affect your credit score if it’s reported to major credit bureaus. Till then, you can rectify the situation by paying the amount you owe plus late fees. This will bring your current account.

However, even a single late payment can ruin your credit and payment history if it’s due more than 30 days ago. The number of days can vary by the loan type. Even if you eventually pay off your balance, late payments are not as easy to go off. They come with long-term consequences for your credit history.

How Long Do Delinquent Payments Stay on Your Credit Report?

Delinquent payments stay on your credit report for up to seven years from the original delinquency date. Besides the late payment itself, there may be other records in your credit report associated with delinquency. For example, if a creditor charges off your debt and sends your account to debt collectors, this will also be displayed in your credit profile and damage your credit scores.

Other Consequences of Delinquency

Consequences of delinquency can vary depending on the loan type. Besides negatively impacting your credit report and adding extra fees to your overall debt, there can be other specific effects.

Student loan delinquency: When it comes to federal loans for students, the government can attempt to collect debt from you after delinquency goes into default. For example, it can withhold money from your tax refunds or Social Security checks. Also, you will not be eligible for any of the federal student loan forgiveness programs.

Auto loan delinquency: If your account gets a default status, a lender can repossess your automobile. Check your loan agreement for more details.

Mortgage delinquency: Mortgage lenders can foreclose your house if you fail to make your payments for over 90 days.

Credit card delinquency: Your credit card account may be sent to collecting agencies in order to make you pay off your debt. This will also be displayed in your credit report.

Additionally, you should be aware of the consequences that come with credit score damage. Besides problems with getting other loans or credit cards down the road, you can face challenges when applying for a mortgage or trying to rent an apartment. A bad credit score can also affect your insurance rates or even hold you back from getting a job in a sphere of finance.

What Should I Do If I Have Delinquent Accounts?

Here are some steps you can take if you have delinquent accounts.

Communicate with Your Lender

Communication is often a key to solving problems peacefully. As a lender is also interested in getting its money back, it may offer you some practical ways to get back on track. They may include mortgage modifications, income-driven repayment plans, or some extended repayment schedules. Be that as it may, hiding from the lender and ignoring its notifications and letters is probably the worst thing you can do. This way, you can end up in court.

Consolidate Debt

Debt consolidation can help you cover all your existing loans by combining them into a new one with a single monthly payment. This is a powerful tool you can use to gain some time or make your loans more manageable. However, make sure you can afford this debt before going into it.

Contact a Credit Counselor

You can seek credit counseling if you find it difficult to make ends meet and see no way to get out of this situation on your own. Check out whether it’s a local non-profit credit counselor who can provide free consultations and help you develop a debt management plan.

How to Avoid Delinquency and Default

It seems crystal clear that making on-time payments is the only way to avoid delinquency and default. However, we all can be there at some point. Here are a few not-so-obvious tips you can follow to avoid delinquency and default.

Make Sure You Can Afford What You Borrow

Do proper calculations before applying for a loan. You need to understand whether the amount you borrow suits your budget. Pay attention to the potential monthly payments to ensure they are affordable enough to make them timely within the entire loan life.

Build an Emergency Fund

An emergency fund can give you peace of mind for some unexpected situations. Although it’s recommended to have at least enough to cover 3 to 6 months of living expenses if you lose your main source of income, it’s a long-distance matter. Start small and gradually increase the amount you set aside as your income grows or your financial situation improves.

Create a Budget

One of the first things to do in order to prevent future delinquency is to create a budget for debt repayment. Consider who you owe, how much you owe, and when your payments are due. Prioritize paying off your existing debts and only take out a new loan after covering current ones.

Bottom Line

Your credit accounts are considered in good standing as long as you make your debt payments on time. If you fail to pay off your loan or credit card balances by the due date, your account will be considered delinquent. The longer you don’t pay, the more negative consequences it entails. In the end, this may result in high late fees, credit history damage, repossession of property, and other financial problems. Use the tips provided in the article to avoid delinquency.


Can I Remove Delinquent Accounts from My Credit Report?

Unfortunately, delinquent accounts can’t be removed from your credit report only because you want them to. They will stay there for seven years and fall off automatically after the period passes. However, if it’s a mistake, you can contact the lender to dispute the claim.

What is an IRS Interest Rate on Delinquency?

The IRS rate on delinquency is a fine you have to compensate to the Internal Revenue Service when you pay your taxes late. It’s now 0.5% of the tax you owe after the due date for each month the tax remains unpaid.

How Can I Define a Delinquent Payment?

You can define a delinquent payment by reviewing your credit report. Additionally, many lenders and credit card companies send past-due notices to borrowers via email.

Can I Get a New Loan with Delinquency?

Some lenders may still offer you a new loan with delinquency. However, your options will be limited. Even if you get approved, you’re most likely not to get favorable loan terms. Lenders that provide bad credit loans typically apply very high interest rates.