If a layoff, medical bill, or pay cut means you can’t make a loan or credit card payment, call your lender before the payment is late and ask for its hardship team. You don’t need to be behind to ask, and calling first can keep a late payment off your credit report.
Once the due date passes, the costs start. A late fee can post the next day, and when a payment reaches 30 days past due, the lender can report it to the credit bureaus, where it stays for up to seven years.
Hardship help exists at card issuers, auto lenders, mortgage servicers, and student loan servicers, though card issuers rarely advertise theirs. A card hardship plan can cut your interest rate or minimum payment for a few months. An auto lender can defer a payment or two. A mortgage servicer can arrange forbearance, a temporary pause or reduction in payments that you repay later.
The sooner you call, the more choices a lender can offer. A payment you miss before a plan starts can stay on your credit reports even after you enroll.
Call the number on your statement before the due date and ask for the hardship or financial assistance team by name, or for loss mitigation at a mortgage servicer. Be ready to explain what changed, what you can pay now, and when you expect to resume full payments. Before you agree to a plan, ask four questions:
- How will the plan show up on my credit reports?
- Does interest keep adding up during the plan?
- Will my card be frozen, closed, or given a lower limit?
- What will I owe when the plan ends, and when is it due?
Then get the terms in writing. If the plan shows up on your credit report after a rep said it wouldn’t, the written agreement is your evidence in a dispute.
Say you lose your job while carrying a car loan and two credit cards. The same week, you call all three lenders before any payment is due. The auto lender defers one payment, both card issuers cut your minimum for six months, and nothing goes 30 days late while you look for work.
When you can’t make a payment, treat its due date as your deadline to call the lender.
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