Paying bills late
When paying bills, you want to make sure you always pay them on time. In this extremely volatile economy, many consumers are finding it difficult to pay their bills on time. Research has shown that one out of three Australians will pay one bill late this year, whether that be a credit card, mortgage or personal loan. While times are tough, the truth is, many people do not understand the impact paying their bills late will have on their credit report.
When paying bills late, you will negatively impact your credit score. Unfortunately, this can put a mark on your credit report for five years or more. When this happens, you will have a much more difficult time obtaining new credit. If you pay your bills late, and do not think it will have no impact on your future borrowing at all. New reporting laws are coming into effect and that will show when you are even one day late on making a payment.
Take this as an example when paying bills. You find that you are running low on funds so you decide that you are going to wait several days to pay that credit card bill that is due. Your paycheck will be here in a few days so you will pay it then, you have always paid your bills on time so you figure that this one time will not make any difference. You pay your bills only three days late. On your next month’s statement, you notice that you have been charged a rather hefty fee for paying your credit card bill late, and your interest rate was raised.
When you call the credit card company they explain that regardless of your perfect payment history in the past, you were late and your terms and conditions detail what happens with your credit card when you make a late payment. A year or so later you attempt to get a mortgage and are told you may have a difficult time obtaining one because your credit report shows a late payment. Your credit score has also dropped a few points, which, if you do get approved for the mortgage, will cause you to receive a much higher interest rate. This in turn will increase the value of your monthly mortgage repayment amount.
As you can see, even one late payment can make a huge impact on your credit. Always make sure to pay ALL your bills on time.
