Back in the days when credit card statements and billing were exclusively handled by the U.S. Postal Service, folks often had a legitimate excuse when payments were late or somehow got mixed up. We all remember that ever-popular statement, “The check is in the mail.”
Late payments, however, have never been a positive for a credit report. The long-term impact of even one or two late (or even worse, entirely missed) payments can build into a serious strike against your overall credit score, and your ability to receive the benefits of good credit.
The timeliness (or lack thereof) of your payments makes up more than a third of the various factors that go into your credit score, and therefore is a critical factor in helping to maintain a healthy credit picture.
For those who are interested in cleaning up their credit report, a quick fix for the future is a bit of monthly financial planning – and a personal commitment to make those bill payments on time, every time.
Auto-Pay Saves the Day
You’ve likely noticed that all of your creditors issuing monthly bills–credit cards, automobile loan companies, mortgage companies, cell phone carriers, and utilities included–offer the option of making automatic payments from your checking or savings account.
Like automatic payroll deductions from your monthly paycheck or automatic deposit into a banking account, your bills can also be set up to be paid on time, every time.
Unlike the old-fashioned procedure of attaching a canceled check to set up withdrawals or transfers, most companies are now able to arrange for monthly payments with just your account and routing number details.
Set things up and you’ll electronically agree to pay the bill’s monthly balance directly from your bank account, never missing a payment again.
Handle With Care
Auto-pay does require one thing, however: money in your bank account to cover the bills. If you’re lucky enough to have a regular monthly or biweekly paycheck, or a nice float of savings in your bank account, you can figure out approximately how much you’ll need to have on hand to cover your recurring bills.
If, like many of us, your bank account is also subject to some ups and downs in cash flow, automatic bill pay may not be the one-size-fits-all solution. A missed payment due to insufficient funds in your bank account can be just as bad as a late payment, with the additional hassle of NSF check fees from your bank and the card or creditor you were unable to pay.
And if you would like some professional help to fix your credit score, we can provide the answers.