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Can You Get a New Credit Card After Making Late Payments?

A new study published recently is highlighting Americans’ anxiety towards paying bills on-time, with many paying late. Late payments can severely hurt your credit score, making it harder to get financing and low interest rates in the future. Can you get a new credit card is you’ve made late payments? The short answer is yes – and here’s how:

Study Highlights America’s Late Payment Habit

Nobody likes paying bills. In fact, a new study shows that most Americans hate paying bills so much that they often pay them late paying – when they do make payments.

That study, conducted by the Aite Group, shows that six-in-ten Americans feel anxiety about paying bills. This anxiety leads almost half of those surveyed, 46%, to pay their bills late.

Paying bills late can have a variety of negative consequences. These adverse actions include:

  • Late fees
  • Penalty interest rates
  • Drops in your credit score

All these potential negatives are bad, but the hit to your credit score can be something from which it is difficult to recover.

Related Article: Here Is What Happens If You Don’t Pay Your Credit Card Bill

The Impact of Late Payments on Your Credit Score

Payment history accounts for up to 35% of your credit score. With FICO, the most popular credit scoring model for lenders, 35% of your score is determined by payment history. With VantageScore, the second most popular scoring model among lenders, your payment history accounts for 32% of the total figure.

Regardless of the scoring model, payment history is the most critical aspect of what makes up your credit score – and late payments can hurt you for several months, if not years. Late payments stay on your credit report for seven years, and even one missed payment can cause your credit score to plummet.

Even a steady string of on-time payments can struggle to offset late or missed payments, making credit repair seem impossible. That’s because, surprisingly, even having a payment history with 97% of on-time payments is enough to harm your credit score.

There is hope, however.

What Types of Credit Card Can You Get with Late Payments?

Making on-time payments with your existing credit card might not be enough to rebound from missed payments in the immediate term. Fortunately, there are practical ways to bounce back from late payments quickly. The first step – the one presently being discussed – is getting another credit card to supercharge your history of on-time payments.

Secured Credit Cards

One of the easiest ways to rebound from late payments is by establishing an overwhelming record of making your payments on time. With one credit card, it can be tough to piece together enough timely payments to outweigh the negative impact of those missed balance payments. Fortunately, secured cards offer an easy way to increase your overall number of timely payments.

A secured credit card is a unique type of card that requires a security deposit. This deposit, typically of $200 or more, acts as collateral for the line of credit and your credit limit. While this may sound like a prepaid card, there are distinct differences:

  • The deposit is your credit limit. When you make a purchase, you pay it off in the same way you would with any other credit card.
  • Prepaid cards act like debit cards. The balance you add makes up your total available funds. Once it is spent, you must reload.
  • Secured cards report to the major credit bureaus, allowing you to rebuild your credit with regular payments and low credit usage.
  • Prepaid cards can’t help you build credit.

The best way to use a secured credit card is to only make small purchases with it. Keep the balance low and repay the entire statement every month. In conjunction with other on-time payments, you can quickly overwhelm the negative impact of late payments and improve your credit score.

Related Article: What Are the Best Secured Cards for Rebuilding Credit?

Unsecured Cards for Bad Credit

You might think that a credit card that doesn’t require a security deposit is an impossibility with bad credit, but that’s actually not the case.

There is a vast assortment of subprime credit cards. Subprime refers to the credit profile that these cards are marketed to, namely those with bad credit or fair credit scores.

Many of these cards fall into a category known as “instant approval” credit cards. While “instant approval” makes it sound like anyone can get these cards automatically, that’s not quite true. Instead, it merely means these cards provide a quick application process and decision on your application comes in a matter of minutes. Some cards, like the Destiny Mastercard, provide pre-qualifications.

Unsecured credit cards for bad credit differ from secured cards in that they have no security deposit requirement. Because of this unsecured line of credit, however, credit limits tend to be low. The average credit limit for an instant approval card is around $300 to $400, for example. Many cards, like the Surge Mastercard or the First Digital NexGen Mastercard, also offer the chance at a credit limit increase with responsible use and on-time payments.

Related Article: What Are the Easiest Credit Cards for Bad Credit to Get?

Conclusion

Many Americans face severe anxiety when it comes to paying bills, resulting in almost half of consumers paying bills late. Your payment history is the most critical part of your credit score. Even one late payment can have a lasting impact on your credit report for years to come – including new credit cards.

However, even those with severely damaged credit can still quickly rebuild it through responsible credit card use. This process involves getting a credit rebuilder credit card, using it to make small purchases only, and paying the full statement balance, on time, each month.

Related Article: Can You Raise Your Credit Score 100 Points In a Month?

About: Cory
Cory Santos

Cory is BestCards.com's "Jack of all trades" and resident rewards expert, covering all facets of the points game – especially travel, hotels, and airlines. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.