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10 Tips to Keep Negative Credit Events from Snowballing

Last updated Mar 6, 2024

Your credit score is one of the more important components of your credit history. It’s a three-digit number affected by 5 major factors that can determine many of your financial options. Nurturing and monitoring your score can help you get a good credit score and stay on track to financial freedom. 

But slip-ups can happen to anyone. They can snowball and, unfortunately, significantly lower your credit score. Let’s look at how negative credit events can snowball and explore some tips to keep your credit on track.

What is a credit event?

A credit event represents any information regarding your financial history that appears on your credit report. Credit information on your report includes types of accounts, name of loan or credit providers, credit limits and loan amounts, payment history on all accounts, and more. 

Some negative information can snowball and affect your credit score and report for up to 10 years. When a business or financial institution runs a credit check on you, they will see each of these negative credit events until they fall off. The exact effect of a new derogatory mark on your credit score can depend on other information in your credit file, and you may experience a different impact on your score than someone with a different credit history. 

The good news is that you can address some of the smaller negative credit events before they build up and turn into something much worse. 

The Importance of Making On-Time Payments

One of the most common negative credit events that appear on credit reports and can snowball quickly is late payments. These can also include partial payments. Every late payment can show up on your credit report. 

Creditors must wait 30 days to report your delinquent payment to credit bureaus. So, let’s say you’re a few days or a couple of weeks late on the payment, and you make the full (late) payment before those 30 days are up. In some cases, lenders and creditors may not report it to the credit bureaus as a late payment, but they may charge a late fee. 

However, if you’re beyond 30 days late on a payment, your creditor may report it to the credit bureaus. And, the later your payment, the more likely your credit will suffer dramatically. For example, depending on your circumstances, your creditor can “charge off” your account and sell it to a collection agency. A charge-off occurs when you have fallen behind on your payments and your lender writes off your account as a loss, generally between 120 and 180 days after you become delinquent, and closes your account off to future charges. This would severely damage your credit and appear on your credit report. It’s crucial to get ahead of large, credit-shattering events like this to stay on track and maintain your credit health. 

10 Tips to Keep Negative Credit Events from Snowballing

You can reduce your chances of being caught off guard with more credit than you can handle by making some of these financially healthy choices:

  1. Build an emergency fund. Unexpected expenses can happen to anyone, but they don’t have to destroy your credit. One way to get ahead of surprise expenses is to build an emergency fund. Instead of falling behind on other payments to pay for an urgent expense, you’ll already have money set aside specifically for it. Preparing for these situations can set you up to avoid negative credit events and help you maintain a healthy credit history.
  2. Create a budget. It sounds simple, but budgeting out your monthly expenses is one way to ensure you don’t fall behind on payments that can snowball one after the other. Prioritize your credit card and loan payments if your funds allow.
  3. Be aware of variable interest rates. Variable interest is a type of APR that may fluctuate based on current indexes, meaning your interest rate can change quickly. Be aware of the type of interest you’ll be paying so you don’t get caught off guard.
  4. Don’t assume you’ll pay off balances before your introductory rates expire. Some credit card companies and banks offer introductory rates to get you in the door. These rates typically last 15 to 21 months but can last longer in some cases. Once the rates expire, you’ll likely pay higher interest rates. Be prepared to pay those if you can’t pay off your full balance before the rate changes take effect.
  5. Consider the long-term cost of revolving credit. Revolving debt allows you to borrow against an established credit limit. As long as you haven’t hit your limit, you can keep borrowing. Generally, whenever you pay less than the full balance, you’ll be charged interest. So, if you carry a large balance and it keeps building, you’ll be paying interest on that balance, which could mean you’ll be paying a lot of money in the long term.
  6. Take out loans with more predictable payment schedules. If you decide it’s in your best interest to take out a loan or borrow money, having predictable payments will help you determine exactly how much to set aside each month and can help you budget the rest of your money. 
  7. Set up autopay and make consistent, on-time payments. Payment history is a major factor that affects your credit score. A great way to make sure you are making on-time payments is to set up autopay for every credit line and loan you take out. (Just remember that you need to have sufficient funds in your account for autopay to work as expected!)
  8. Pay credit card balances in full. Only paying the minimum balance on credit cards can snowball and turn into a mound of debt that can impact your credit utilization ratio. Pay balances in full, when you can, to avoid getting caught with more debt than you can handle. If you can’t pay the full balance, you can use a credit card balance calculator to see when your debt will be paid off based on how much you can pay.
  9. Consider consolidating your debt. If you’re paying high interest rates, you may want to consider consolidating your debt into one monthly payment. You may even receive lower interest rates than you currently have, which could help you stay on track with payments. 
  10. Pause loan/credit payments if you start to fall behind. Reach out to your loan or credit card provider to learn about their hardship options. If you recently lost your job or you feel like you might miss a payment for another reason, it’s good to get ahead of it before it becomes a delinquent payment. 

Rebuilding Credit After a Small Credit Event 

It’s crucial to develop a plan and make changes to your financial health after negative information lands on your credit report. Without a plan, it can be easy to give in to the thinking that you’ll never rebuild your credit. Start by taking steps to address some of the common slip-ups to get your credit headed in the right direction. 

Monitoring your credit health is a great next step. Check your credit score and your credit report regularly to make sure there are no errors. If you do find an error, take these steps to fix it. You can use Upgrade’s free Credit Health tools to understand what you can do to improve your score and get it on track. 


You can use these tips to reduce your risk of the snowball effect happening to you. If you slip up and a negative credit event occurs, take the steps to rebuild and monitor your credit and get yourself back on track. And remember, on-time payments can make all the difference!

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