How Late Payments Are Going To Ruin Your Credit And Finances
May 18, 2018 14:48
There are tons of people who make late payments. It is often very easy to forget to pay your bills. This is why many people have decided to use an automatic payment system. Still, this doesn’t solve every problematic case. It is always in your best interest to get your bills paid on time. The repercussions of failing to do so are going to be very dramatic and severe. Late payments are going to negatively impact your credit and your finances. You’ll find out why this is the case below.
The Hefty Late Fee
First and foremost, you should understand that you’re going to be hit with a late fee. Even if you pay the bill an hour or two late, you’re most likely going to be forced to pay the fee. The prices can vary depending on the company in question, but the late fee can sometimes be as high as $35. That might not seem like a lot of money to some people, but it will add up very quickly with multiple late payments. You should also be cautious about getting your service canceled. If this happens and you want to turn it back on, you’re going to have to pay another fee to get it turned back on.
Potential Interest Rate Hike
If you’re paying creditors, you’re going to be in for even more trouble. In many cases, failing to pay creditors on time will cause your interest rate to be increased. This will usually reset the rate to a penalty or default APR. While it depends on the credit card in question, this rate can be as high as 29.99%! You may have a promotion 0% APR. If so and you miss a payment, there is a possibility that you’re going to lose it. Suffice to say, you need to get those bills paid on time!
Could Show Up On Your Credit Report
If you haven’t paid your bills on time, there is a possibility that it is going to show up on your credit report at some point in the future. Usually, this will only happen when the payment is late by more than 30 days. When this happens, a notice will be submitted to the three credit bureaus. In many cases, that late payment is going to remain on your credit report for at least seven years. How long do late payments stay on your credit report? It really depends, but seven years is the average.
Could Impact Credit Score
Your credit score is vitally important. If you let it go to ruin, you’re going to regret it terribly in the near future. After all, a poor credit score will make it difficult to obtain a loan. You might even have trouble getting certain jobs. Approximately 35% of your credit score is going to be made up of your payment history. This is really one of the most important factors when it comes to tabulating your credit score. With that being said, missing a payment or two could severely impact your credit score. Make sure that you get those bills paid so you can avoid problems!
What To Do
Sometimes, you just can’t help but miss a payment. If this happens, you should not fret right away. There may be ways to solve the problem without ruining your finances or your credit. First and foremost, you should think about requesting the removal of the late payment fee. If you’ve never had a late payment in the past, there is a possibility that the bank will let it go this time. Cross your fingers and get in touch with them.
You should also begin taking steps to reset the interest rate. The penalty rate is too high, but it doesn’t have to late forever. As long as you make your payments on time for six months or so, the issuer will most likely reset the interest rate to the normal rate. Finally, you should make sure that you get your credit score in order. The best way to do that is by paying your bills on time from now on. With patience, you’ll eventually be able to repair your credit score and get back on the right path to success.
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