By MIKE GOLDSTEIN
Have you ever missed a credit card or loan payment? If you have, you're definitely not alone. We've been tracking the Credit Fumble™, a phenomenon where young people make a credit or financial mistake that can take years to recover from. Even one missed credit card payment can fall into that category.
Our study found that nearly half (47 percent) of Americans under the age of 30 had missed at least one credit card or loan payment.
While missing one payment may not be as big of a deal as something like having an account in collections, racking up a history of consistent missed payments can seriously mess with your credit score. Here's a look at the U.S. cities where 18- to 24-year-olds missed the most payments.
10 Cities Where Missed Payments Are The Most Common
The relationship between local economic conditions and the prevalence of missed payments is pretty simple: Where there's a weaker economy, there are generally more missed payments as well.
Eight of the 10 cities with the most missed payments are also among the top 50 impoverished cities (with San Antonio and Madison, WI the only exceptions). None of the cities with the highest on-time payment averages are in the top 50.
10 Cities Where Missed Payments Are The Least Common
With five cities in California, the West Coast dominates this list. Boston's the only city in the top 10 that's east of Arizona.
Unsurprisingly, most of these cities are pretty healthy economically. Each city in our top ten has a median household income that surpasses the national average of $53,482. Fremont leads the way at $103,591.
They also have above-average credit scores. Among the 100 U.S. cities we looked at, young people in Irvine, California, have the best average credit score at 646 (compared to an average of 500 in Detroit), and every other city in the top 10 for on-time payment percentage also ranks highly in terms of credit score. This makes sense, given the impact that missing a payment can have on your credit score.
Why Late Payments Matter
"Paying off credit card balances on time and in full each month is one of the most important factors for a healthy credit score," says Ken Chaplin, senior vice president at TransUnion.
Each late payment can stay on your credit report for seven years and potentially harm your credit score. A pattern of paying late or not at all can be even more harmful.
For example, Milwaukee's on-time payment mark of just 90.5 percent means that 18- to 24-year-olds are missing about 1 out of every 10 payments on average. That kind of record can make lenders seriously hesitant to lend to you in the future.
Failing to make minimum payments can also cost you a whole lot of money. Carrying a credit card balance from month to month will result in interest charges on most credit cards, and you can also be hit with late fees.
Many credit card providers also apply penalty APRs to borrowers who have missed payments in the past, meaning you could be on the hook for even higher interest charges in the future. With some credit cards, late fees can be as high as $35, and according to a 2014 CreditCards.com survey, the average credit card penalty APR was a hefty 28.45 percent.
If this has happened to you, there could be light at the end of the tunnel - the 2009 CARD Act requires your provider to review your penalty APR rate every six months after it's increased so they may reduce it if you've demonstrate a history of on-time payments in that period.
What You Can Do If You've Missed Payments
1. Ask your lender for help.
If this is your first time slipping, your lender might be willing to help you out. Give them a call or write them a letter, and they might be willing to waive your late fee, forgo the penalty APR or even remove the late payment from your credit report.
2. Pay off your balance.
So you missed a payment. Don't let your late fee turn into a mountain of interest. If you can, you should pay off your balance as soon as you can. If you got hit with a penalty APR, getting back on track with a series of on-time payments could also get your lender to lower your APR back to its normal level.
3. Focus on your other accounts.
If you have other credit cards or loans, make sure you keep racking up on-time payments on those. Set up autopay and bill reminders to make sure you don't slip up again in the future. Your mistake won't just disappear, but the more on-time payments you have, the smaller your missed payment will seem in comparison.
You could even try to score on-time payments from your other financial obligations if they're not already being reported to the credit bureaus. "Ask your landlord to report on-time rent payments to (the credit bureaus) so they can be factored into your score," Chaplin suggests. They're not required to do so, but they may agree.
No matter why it happened, even just one missed payment can put your credit score in a worse place. If you've had some missed payments, though, it's never too late to get back on track with some smart decisions and responsible planning.
*All credit score and report data are based on Credit Karma members between the ages of 18 and 24 who live in the 100 largest cities in the U.S. and got their credit report through Credit Karma in 2015.
In late November and early December 2015, Credit Karma, with research company Qualtrics, surveyed 1,051 Americans between the ages of 31 and 44 to understand the difficulties they faced managing credit in their 20s and how they recovered financially.
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