Everyone knows that making payments on time is of utmost importance. Not paying on time may not warrant any explanation, but this is especially true for creditors. Creditors do not want late payments on their books. Late payments will make it harder for them to extend credit and, they will probably lose some of the customers.
Late payments and small creditors
Late payments will normally be a problem for small creditors. However, it gets much worse. Your late payment could end up on your credit report and lower your credit score. After all, the payment was not made by you. It was made by someone else.
Late payments can easily be addressed by direct deposit. After your check is cut and mailed, the money is automatically deducted from your checking account. This is not true about payments made by your Visa and MasterCard. The payments don’t go through right away. The money is removed from your bank account the next business day after paying for items on your credit card statement like your utilities. However, if your card company does not use one of these two methods, they will probably report the payment to the credit report. Later I also posted an article about Credit Cards.
If your credit card company reports your payment, you will lose points on your credit statement and your score will suffer. Your score is a large factor when lenders are making credit decisions. Expect the lowest credit prices. Make sure that everything is in order and your score is higher than what the lenders are seeing. If you don’t score well, you will not qualify for the lowest credit prices.
Make sure that the payments are not too high each month and that you have adequate funds to pay the balance. If you don’t have a savings account, you may have to pay someone to help you budget your payments and deposit checks. Consider using money market accounts that will earn more interest. If you cannot manage your finances, consider a personal loan from your banking institution or a broker to pay each debt. Extra income should help you pay your debts.
Making late payments is a hassle but not if you know how it will affect your credit score. A day or two late will not have as adverse an effect as five years of making no payments. Do everything that you can to make sure that your payments are made on time. Use tools like direct deposit and money market accounts to help you make your payments.
By the way, check out the latest post about equity loans.