Tuesday, September 13, 2016

Do You Pay Your Bills On Time?

Seriously, do you?  Have you ever missed a payment on a credit card?  Have you ever had a call from a debt collector?  Have you ever had to beg for someone to lend you money so you could pay your bills?
Repayment history makes up 35% of your FICO score.  That means that if you've ever been late, if you've ever had anything in collections or if you've ever skipped paying something or put it off for more than one billing cycle, that you have probably had your FICO score dip.
The fact is that repayment history makes up the majority of your FICO score.  You really need to do whatever is in your power to make your payments on time.  If you are late with a payment or do not receive a bill and then get charged a fee and you've never done this before you should call your credit card company and ask them to remove the late fee and see if they will report you as on time and not late.  This obviously can not be done more than once or twice but if you are a customer in good standing than you should be able to get the fees dropped and have them fix the credit reporting.
Some credit card companies will report you as late even if the payment is only 1 day late.  They also will raise your APR (annual percentage rate) so make sure you are making your payments on time so that you don't start having to pay more in interest, additional fees and have your FICO score affected.
Do these red flags show up on your credit report?
-Short Sale
If those words show up anywhere on your credit report you may have issues applying for and being approved for any additional credit in the future.  Banks and credit unions do look at the length of time between when these things occur and when you are applying for credit but these things are definite negatives and will not only affect whether you can get credit but what your FICO score is.

Bottom line: make your payments on time.  Pay your utilities, pay your credit cards, pay your bills on time.  Even if you only pay the bare minimums make sure you are paying something.
This is not advice that would probably be given to you by Dave Ramsey but this is my advice - if you can not afford your minimum payments on your credit cards than you are over charging.  You need to pay your debts.  If you are unable to then you need to figure out a way to get the balances to a reasonable level so you can pay them.  I do not recommend bankruptcy unless the debts are massive but there are other things that you can do.  I will go into that in another blog posts but I highly recommend that you get an accountability partner and someone you can discuss finances with and be honest with and go over your debts.

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