Maintaining good credit is very important to our financial lives, and while there are certainly people out there who take a flippant attitude towards their money, most of us understand that keeping our credit in line is essential. This is why we keep a watch on our debt levels and make sure to make our mortgage payments on time.
While paying credit accounts on time is certainly a good money move, many of us forget that making any type of late bill payment will negatively impact our credit in a big way. Not sure why being careful to pay all your bills on time is important? Take a look at the details below for more information.
Late payments, big consequences
Achieving and maintaining a good credit score means having your whole financial act in order, but certain financial habits will have a bigger impact on your credit than others. Without a doubt, the most significant thing you can do to move your credit score in the right direction is pay your bills on time.
This is because 35% of your credit score – the largest portion – is determined by your track record with paying your bills by their due dates. This means that if you’re habitually paying any bill late, you’re doing serious damage to your credit that will be hard to undo.
Every bill matters
Now that it’s clear why paying on time is important, it’s worth mentioning that every single bill you have needs to be given equal attention when it comes to making payment priorities. Many people mistakenly think that only credit accounts – like credit cards and mortgages – will be reported to the credit bureaus if you pay late, but this is not the case. Chronically late payments to your cable company or utility providers will also ding your credit.
This is because cell phone, cable, and utility companies also work with the major credit bureaus and let them know if you pay your bills late. This is will be reflected negatively in your credit history, and ultimately your credit score, if you make a habit of it.
How to pay on time, every time
Now that it’s clear why paying all of your bills on time is important, here are a few tips for helping you meet this goal:
- Make a budget that accounts for all of your monthly obligations – this way, you’ll know the money is there when it’s time to pay
- Create a master calendar that maps out the due dates for all of your bills, then put it in a place you’ll see it every day, like your fridge or your bathroom mirror
- If you’re into technology, set your phone or computer to alert you of your bills’ due dates – this way, you’ll have a hard time overlooking a payment deadline
When it comes to your credit, don’t leave anything to chance – pay all your bills on time every month. This is the fastest way to getting and keeping a high score!